Anxiety Ahead Of Bernanke Speech, Data Drags Stocks Lower - U.S. Commentary

(RTTNews) - While selling pressure was relatively subdued, stocks moved mostly lower over the course of the trading day on Tuesday. With the loss on the day, the Dow pulled back off the record closing high set in the previous session.

The major averages all ended the day in negative territory, although the Dow edged down only 8.99 points or 0.1 percent to 15,967.03. The Nasdaq fell 17.51 points or 0.4 percent to 3,931.55 and the S&P 500 slipped 3.66 points or 0.2 percent to 1,787.87.

The weakness seen at the close of trading on Wall Street was partly due to trepidation ahead of the release of some key economic data on Wednesday, including reports on retail sales, consumer prices, and existing home sales.

The reports could have a significant impact on expectations regarding when the Federal Reserve will begin scaling back its asset purchase program.

In light of the focus on the outlook for the Fed's stimulus program, traders are also likely to keep a close eye on remarks by Fed Chairman Ben Bernanke.

Bernanke is scheduled to deliver the Herbert Stein Memorial Lecture at the National Economists Club's annual dinner in Washington at 7 pm ET.

Meanwhile, traders largely shrugged off a report from the Labor Department showing that employee compensation costs rose by slightly less than expected in the third quarter.

The Labor Department said its employment cost index rose by 0.4 percent in the third quarter following a 0.5 percent increase in the second quarter. Economists had expected the index to rise by another 0.5 percent.

Among individual stocks, shares of Best Buy (BBY) fell sharply after the consumer electronics retailer reported better than expected third quarter results but warned that its holiday promotions could have a negative impact on margins in the fourth quarter.

Campbell Soup (CPB) also came under pressure on the day after the soup maker reported weaker than expected first quarter results and lowered its full-year guidance.

On the other hand, Dow component Home Depot (HD) moved to the upside after the home improvement retailer reported better than expected third quarter earnings. The company also raised its full-year earnings and sales guidance.

Sector News

Trucking stocks showed a significant move to the downside on the day, dragging the Dow Jones Trucking Index down by 1.6 percent. Con-way (CNW) and C.H. Robinson (CHRW) turned in two of the sector's worst performances.

Considerable weakness also emerged among semiconductor stocks, as reflected by the 1.3 percent drop by the Philadelphia Semiconductor Index. Altera (ALTR) helped lead the sector lower after Goldman Sachs removed the stock from its Conviction Buy List.

Railroad stocks also came under pressure on the day, with the Dow Jones Railroads Index falling by 1.1 percent after ending the previous session at a record closing high.

Software and tobacco stocks also saw notable weakness, while most of the other major sectors ended the day showing more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index dipped by 0.3 percent, while China's Shanghai Composite Index edged down by 0.2 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index dropped by 1.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index both fell by 0.4 percent.

In the bond market, treasuries moved moderately lower, offsetting the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.4 basis points to 2.712 percent.

Looking Ahead

Trading on Wednesday is likely to be impacted by reaction to Bernanke's speech as well as the slew of economic data. The release of the minutes of the latest Fed meeting is also likely to attract attention.

Additionally, Deere (DE), J.C. Penney (JCP), Lowe's (LOW), and Staples (SPLS) are among the companies due to release their quarterly results before the start of trading on Wednesday.