Stocks Close Mostly Lower But Dow Posts Modest Gain - U.S. Commentary

(RTTNews) - After ending the previous session roughly flat, stocks fluctuated over the course of the trading day on Tuesday. The markets had a somewhat negative bias on the day, however, as a sharp drop by the price of crude oil weighed on energy stocks.

While the Dow managed to inch up 17.60 points or 0.1 percent to 17,383.84, the broader Nasdaq and S&P 500 both closed in the red. The Nasdaq slid 15.27 points or 0.3 percent to 4,623.64, and the S&P 500 fell 5.71 points or 0.3 percent to 2,012.10.

The losses posted by the Nasdaq and the S&P 500 were partly due to weakness among energy stocks, which came under pressure along with the price of crude oil.

Crude oil for December delivery tumbled $1.59 to a three-year closing low of $77.19 a barrel. Brent crude, the international benchmark, also hit a four-year low.

The steep drop by the price of crude oil came amid news that Saudi Arabia, OPEC's largest oil producer, cut export prices to the U.S. due to an increase in domestic production.

Nonetheless, overall trading activity was somewhat subdued amid uncertainty about the outcome of today's midterm elections, which could impact the political environment for the next two years.

Republicans are expected to increase their majority in the House, but it remains to be seen whether they will pick up the six seats needed to retake control of the Senate.

Traders were also likely looking ahead to the release of some key economic data in the coming days, including the closely watched monthly jobs report on Friday.

Before the start of trading, the Commerce Department released a report showing that the U.S. trade deficit widened by much more than expected in the month of September.

The report said the trade deficit widened to $43.0 billion in September from a revised $40.0 billion in August. Economists had expected the deficit to tick up to $40.2 billion from the $40.1 billion originally reported for the previous month.

The wider trade deficit largely reflected a decrease in the value of exports, which fell 1.5 percent in September after hitting a record high in August.

Sector News

Within the energy sector, oil service stocks turned in some of the worst performances, dragging the Philadelphia Oil Service Index down by 3.3 percent. With the loss, the index pulled back toward the nearly two-year closing low set last month.

Weatherford (WFT) and Nabors (NBR) posted particularly steep losses on the day, tumbling by 7.6 percent and 7.1 percent, respectively.

Significant weakness was also visible among natural gas stocks, as reflected by the 1.9 percent loss posted by the NYSE Arca Natural Gas Index. The weakness came despite an increase by the price of the natural gas.

Outside of the energy sector, gold stocks showed a substantial move to the downside, dragging the NYSE Arca Gold Bugs Index down by 3.9 percent. The index fell to a new six-year low, as gold for December delivery dipped $2.10 to $1,167.70 an ounce.

Steel stocks also saw considerable weakness, resulting in a 1.9 percent loss by the NYSE Arca Steel Index. AK Steel (AKS) led the sector lower after reporting a third quarter loss.

Meanwhile, airline and trucking stocks moved sharply higher on the day amid optimism about lower fuel prices. The NYSE Arca Airline Index surged up by 3.1 percent, while the Dow Jones Trucking Index jumped by 2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index surged up by 2.7 percent, while Hong Kong's Hang Seng Index fell by 0.3 percent.

Meanwhile, the major European markets all came under pressure on the day. While the French CAC 40 Index tumbled by 1.5 percent, the German DAX Index slid by 0.9 percent and the U.K.'s FTSE 100 Index dropped by 0.5 percent.

In the bond market, treasuries pulled back near the unchanged line after failing to sustain an early upward move. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.342 percent.

Looking Ahead

While the outcome of the elections is likely to be in focus on Wednesday, trading could also be impacted by the release of reports on private sector employment and service sector activity.

Additionally, Duke Energy (DUK), Enbridge (ENB), Tim Hortons (THI) and Time Warner (TWX) are among the companies due to report their quarterly results before the start of trading on Wednesday.