Stocks Close Mixed After Recovering From Early Weakness - U.S. Commentary

(RTTNews) - After coming under pressure in early trading, stocks regained ground over the course of the trading session on Tuesday. The major averages climbed well off their worst levels of the day and eventually ended the session mixed.

While the Dow and the S&P 500 managed to climb back into positive territory, the Nasdaq edged down 12.06 points or 0.2 percent to 5,083.24. The Dow crept up 27.73 points or 0.2 percent to 17,758.21 and the S&P 500 rose 3.14 points or 0.2 percent to 2,081.72.

The early weakness on Wall Street partly reflected concerns about the outlook for monetary policy following last Friday's better than expected October jobs report.

The upbeat jobs report has led to increased speculation that the Federal Reserve will finally raise interest rates at its meeting next month.

Mikael Olai Milhøj, an analyst at Danske Bank, said, "Recent comments and speeches from FOMC members suggest that the doves are 'ready to fly' as well, as they seem to support - or at least accept - the first Fed hike since 2006 at the next FOMC meeting in December."

"In our view, the new battleground for the FOMC members will be how the Fed should proceed once it has begun the new tightening cycle," he added. "We look for four additional hikes in 2016, i.e. in total five hikes from now until year-end 2016."

On the U.S. economic front, the Labor Department released a report before the start of trading showing that import prices fell by slightly less than expected in October.

The Labor Department said import prices fell by 0.5 percent in October following a revised 0.6 percent drop in September.

Economists had expected prices to fall by 0.6 percent compared to the 0.1 percent decrease originally reported for the previous month.

The report also said export prices edged down by 0.2 percent in October after sliding by a revised 0.6 percent in September. Export prices had been expected to drop by 0.3 percent.

A separate report from the Commerce Department showed that wholesale inventories rose by much more than expected in September.

The report said wholesale inventories climbed by 0.5 percent in September after rising by an upwardly revised 0.3 percent in August. Economists had expected wholesale inventories to inch up by 0.1 percent.

Sector News

Reflecting the mixed close by the broader markets, the major sectors indexes also turned in mixed performance on the day.

Housing stocks showed a strong move to the upside, driving the Philadelphia Housing Sector Index up by 1.6 percent. D.R. Horton (DHI) helped lead the sector higher after reporting better than expected fiscal fourth quarter results and raising its dividend.

Significant strength was also visible among trucking and commercial real estate stocks, with the Dow Jones Trucking Index and the Morgan Stanley REIT Index climbing by 1.2 percent and 1.1 percent, respectively.

On the other hand, gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 2.8 percent. The weakness in the sector came despite a modest increase by the price of gold.

Computer hardware, semiconductor, and networking stocks also saw notable weakness, contributing to the loss posted by the tech-heavy Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday. Hong Kong's Hang Seng Index slumped by 1.4 percent, while Australia's All Ordinaries Index fell by 0.4 percent. However, Japan's Nikkei 225 Index bucked the downtrend and edged up by 0.2 percent.

Meanwhile, the major European markets ended the day mixed. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the German DAX Index up down by 0.2 percent and the French CAC 40 Index closed just above the unchanged line.

In the bond market, treasuries moved modestly higher, regaining some ground after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 2 basis points to 2.322 percent.

Looking Ahead

Trading on Wednesday may be somewhat subdued due to the Veterans Day holiday, which sees banks closed and a lack of major U.S. economic data.

On the earnings front, department store giant Macy's (M) is due to release its third quarter results before the start of trading on Wednesday.