Stocks Close Modestly Lower But Well Off Worst Levels - U.S. Commentary

(RTTNews) - Shows showed a negative bias throughout much of the trading session on Tuesday but closed well off their worst levels of the day. With the losses on the day, the major averages closed lower for the fourth consecutive session.

The modest averages eventually ended the day modestly lower. The Dow slipped 57.66 points or 0.3 percent to 17,674.82, the Nasdaq edged down 4.89 points or 0.1 percent to 4,843.55 and the S&P 500 dipped 3.74 points or 0.2 percent to 2,075.32.

The weakness on Wall Street came as traders expressed some trepidation ahead of the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but traders are likely to keep a close eye on the accompanying statement.

Fed Chair Janet Yellen's subsequent press conference is also likely to be in focus amid uncertainty about the possibility of a rate hike next month.

Ongoing concerns about next week's referendum on whether Britain will remain in the European Union also weighed on the markets.

A YouGov poll conducted for The Times showed that 46 percent of voters support the so-called Brexit, while 39 percent want to remain in the EU.

On the U.S. economic front, the Commerce Department released a report this morning showing stronger than expected retail sales growth in the month of May.

The Commerce Department said retail sales climbed by 0.5 percent in May after surging up by 1.3 percent in April. Economists had expected sales to rise by 0.3 percent.

Excluding an increase in auto sales, retail sales still rose by 0.4 percent in May following a 0.8 percent increase in the previous month. The ex-auto sales growth matched economist estimates.

The Labor Department also released a report showing that import prices surged up by much more than expected in May amid another substantial increase in fuel prices.

Sector News

Airline stocks saw significant weakness on the day, adding to the steep losses posted in the previous session. Reflecting the weakness in the sector, the NYSE Arca Airline Index tumbled by 2.6 percent to its lowest closing level in four months.

Southwest (LUV), United Continental (UAL), and American Airlines (AAL) posted notable losses amid continued concerns the terrorist attack in Orlando will lead to reduced travel.

Considerable weakness was also visible among steel stocks, as reflected by the 2.3 percent loss posted by the NYSE Arca Steel Index. A.M. Castle (CAS), Cliffs Natural Resources (CLF), and AK Steel (AKS) turned in some of the sector's worst performances.

Financial, gold, and housing stocks also saw notable weakness, while most of the other major sectors ended the day showing only modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday. Japan's Nikkei 225 Index tumbled by 1 percent, while Hong Kong's Hang Seng Index dropped by 0.6 percent. However, China's Shanghai Composite Index bucked the downtrend and rose by 0.3 percent.

The major European markets moved sharply lower on the day. While the French CAC 40 Index plunged by 2.3 percent, the U.K.'s FTSE 100 Index dove by 2 percent and the German DAX Index slumped by 1.4 percent.

In the bond market, treasuries pulled back off their early highs to end the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.611 percent.

Looking Ahead

The Fed announcement is likely to be in the spotlight on Wednesday, overshadowing reports on producer prices, industrial production, and New York manufacturing activity.