S&P 500 Pulls Back Off Record Closing High In Choppy Trading

(RTTNews) - Stocks showed a lack of direction over the course of the trading session on Tuesday as traders seemed reluctant to make significant moves ahead of the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

The major averages eventually ended the day in negative territory, with the S&P 500 pulling back off yesterday's record closing high. The S&P 500 edged down 2.53 points or 0.1 percent to 3,036.89, the Dow dipped 19.26 points or 0.1 percent to 27,071.46 and the Nasdaq slid 49.13 points or 0.6 percent to 8,276.85.

The choppy trading on Wall Street came as traders took a wait-and-see approach even thought the Fed is widely expected to cut interest rates by another quarter point. CME Group's FedWatch Tool is currently pointing to a 97.3 percent chance that the Fed will lower rates by 25 basis points.

Some negative sentiment was generated by a report from Reuters suggesting a phase one trade deal between the U.S. and China may not be signed by a summit in Chile next month.

Selling pressure remained subdued, however, as a U.S. administration official noted a failure to sign the deal by the summit just means more time is needed.

"Our goal is to sign it in Chile. But sometimes texts aren't ready," the official told Reuters. "But good progress is being made and we expect to sign the agreement in Chile."

A mixed reaction to the latest batch of earnings news also contributed to the lackluster performance, with a notable drop by Google parent Alphabet (GOOGL) weighing on the tech-heavy Nasdaq.

After the close of trading on Monday, Alphabet reported third quarter earnings that missed analyst estimates, hurt largely by higher operating costs.

On the other hand, General Motors (GM) moved sharply higher after reporting better than expected third quarter earnings, although the auto giant also lowered its full-year earnings guidance.

Food giant Kellogg (K) also showed a strong move to the upside after reporting better than expected third quarter results.

In U.S. economic news, the Conference Board released a report showing consumer confidence unexpectedly edged lower in the month of October, although the drop came from an upwardly revised level in the previous month.

The Conference Board said its consumer confidence index dipped to 125.9 in October from an upwardly revised 126.3 in September.

Economists had expected the consumer confidence index to climb to 128.5 in October from the 125.1 originally reported for the previous month.

Meanwhile, a separate report released by the National Association of Realtors on Tuesday showed another significant increase in pending home sales in the U.S. in the month of September.

NAR said its pending home sales surged up by 1.5 percent 108.7 in September after spiking by 1.4 percent to a revised 107.1 August. Economists had expected pending home sales to climb by 0.9 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Sector News

Despite the lackluster performance by the broader markets, oil service stocks showed a substantial move to the upside on the day.

The Philadelphia Oil Service Index surged up by 2.6 percent to its best closing level in a month even though the price of crude oil for December delivery dipped $0.27 to $55.54.

Significant strength was also visible among natural gas stocks, as reflected by the 2.3 percent jump by the NYSE Arca Natural Gas Index.

Healthcare and chemical stocks also saw notable strength on the day, while semiconductor and retail stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.5 percent, while China's Shanghai Composite Index slumped by 0.9 percent.

The major European markets also turned mixed on the day. While the French CAC 40 Index inched up by 0.2 percent, the German DAX Index closed just below the unchanged and the U.K.'s FTSE 100 Index fell by 0.3 percent.

In the bond market, treasuries regained some ground after moving notably lower over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.8 basis points to 1.835 percent.

Looking Ahead

The Fed announcement is likely to be in the spotlight on Wednesday, overshadowing reports on private sector employment and third quarter GDP.

Meanwhile, Advanced Micro Devices (AMD), Amgen (AMGN), Electronic Arts (EA), and Mattel (MAT) are among the companies releasing their quarterly results after the close of today's trading.

General Electric (GE), Sony (SNE), Tupperware (TUP) and Yum! Brands (YUM) are also among the companies due to report their results before the start of trading on Wednesday.