Major Averages Close Firmly In The Red After Seeing Early Strength

(RTTNews) - After moving mostly higher in morning trading, stocks showed a substantial downturn over the course of the trading session on Tuesday. The major averages pulled back well off their early highs and into negative territory.

The downturn by stocks was largely attributed to concerns about the escalating conflict in Iraq, which inspired some traders to cash in on the recent strength in the markets.

After moving notably higher over the past few sessions, gold stocks showed a substantial move back to the downside on the day. The NYSE Arca Gold Bugs Index tumbled by 3 percent after ending the previous session at a three-month closing high.

The pullback by gold stocks came despite a continued increase by the price of the precious metal, with gold for August delivery climbing $2.90 to $1,321.30 an ounce.

Oil service stocks also saw substantial weakness on the day, as reflected by the 2.1 percent loss posted by the Philadelphia Oil Service Index. With the loss, the index pulled back further off the nearly six-year closing high it set last Friday.

Considerable weakness also emerged among brokerage stocks, resulting in a 1.5 percent drop by the NYSE Arca Broker/Dealer Index. Investment Technology Group (ITG) helped lead the sector lower after JP Morgan downgraded its rating on the company's stock to Neutral from Overweight.

Natural gas, defense, networking, and railroad stocks also saw significant weakness, reflecting the broad based selling pressure that emerged on Wall Street.

While the major average regained some ground late in the day, they still closed in the red. The Dow slid 119.13 points or 0.7 percent to 16,818.13, the Nasdaq dropped 18.32 points or 0.4 percent to 4,350.36 and the S&P 500 fell 12.63 points or 0.6 percent to 1,949.98.