Stocks Close Modestly Lower Following Lackluster Session - U.S. Commentary

(RTTNews) - Following the lackluster performance seen in the previous session, stocks continued to experience choppy trading on Tuesday.

The major averages bounced back and forth across the unchanged line before finishing the day in the red. The Dow edged down 13.43 points or 0.1 percent to 17.217.11, the Nasdaq slid 24.50 points or 0.5 percent to 4,880.97 and the S&P 500 dipped 2.89 points or 0.1 percent to 2,030.77.

The choppy trading on Wall Street came as traders seemed uncertain about the near-term direction of the markets following recent volatility.

Stocks have recouped a significant portion of the sell-off seen in mid-August, but concerns about the global economy and the outlook for interest rates have limited the upside.

Traders were also digesting a mixed batch of earnings news, with shares of IBM (IBM) moving sharply lower after the tech giant reported weaker than expected third quarter revenues.

IBM reported third quarter earnings that beat analyst estimates but on a bigger than expected drop in revenues. The company also lowered its full year guidance.

Industrial conglomerate United Technologies (UTX) also reported weaker than expected third quarter revenues, although its earnings for the quarter exceeded estimates.

Meanwhile, insurance giant Travelers (TRV) reported third quarter earnings and revenues that came in above analyst expectations.

On the U.S. economic front, the Commerce Department released a report showing that housing starts rose more than expected in September.

The report said housing starts climbed 6.5 percent to an annual rate of 1.206 million in September from the revised August estimate of 1.132 million. Economists had expected housing starts to rise to a rate of 1.147 million.

At the same time, the Commerce Department said building permits tumbled 5.0 percent to an annual rate of 1.103 million in September from 1.161 million in the previous month.

Sector News

Most of the major sectors showed only modest moves on the day, although significant weakness was visible among biotechnology stocks. Reflecting the weakness in the biotech sector, the NYSE Arca Biotechnology Index tumbled by 3 percent.

Alnylam Pharmaceuticals (ALNY), Exact Sciences (EXAS), and Novavax (NVAX) turned in some of the biotech sector's worst performances.

Pharmaceutical stocks also saw considerable weakness, dragging the NYSE Arca Pharmaceutical Index down by 2.3 percent. Valeant Pharmaceuticals (VRX) helped to lead the sector lower, plunging by 10.4 percent.

On the other hand, gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 4.4 percent. The strength in the sector came as gold for December delivery climbed $4.70 to $1,177.50 an ounce.

Oil service, natural gas, and railroad stocks also turned in strong performances, partly offsetting the weakness seen in the aforementioned sectors.

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 0.4 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index fell by 0.6 percent, the German DAX Index and the U.K.'s FTSE 100 Index edged down by 0.2 percent and 0.1 percent, respectively.

In the bond market, treasuries moved notably lower after ending the previous session nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.3 basis points to 2.071 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Wednesday is likely to be driven by reaction to the latest earnings news.

Boeing (BA), Coca-Cola (KO), and General Motors (GM) are among the companies due to report their quarterly results before the start of trading.