Stocks Close Nearly Flat After Another Choppy Trading Day - U.S. Commentary

(RTTNews) - After moving moderately lower in early trading on Tuesday, stocks regained some ground over the course of the session before closing roughly flat. Despite the lackluster close, the Dow still ended the session at a new record closing high.

The major averages all ended the day near the unchanged line, showing moves of less than a tenth of a percent. While the S&P 500 edged down 0.48 points to 1,950.79, the Dow inched up 2.82 points to 16,945.92 and the Nasdaq ticked up 1.75 points to 4,338.00.

The early weakness on Wall Street was partly due to profit taking, with some traders cashing in on the recent upward trend by the markets.

Nonetheless, traders seemed somewhat reluctant to make any significant moves amid a lack of traditionally market-moving catalysts.

News out of China helped limit the downside for the markets, as the Bank of China lowered the reserve requirement for banks advancing loans to the rural sector and small businesses by 50 basis points.

Peter Boockvar, managing director at the Lindsey Group, said, "This move follows other fiscal steps over the past month that has helped the rail industry, some easing of housing restrictions and tax incentives for small business."

"China is doing their best to balance the need to controllably deflate its property bubble without taking down the whole economy," he added.

Additionally, the Commerce Department released a report showing a much bigger than expected increase in wholesale inventories in April

The report said wholesale inventories surged up by 1.1 percent in April, matching the increase seen in the previous month. Economists had expected inventories to increase by about 0.5 percent.

Boockvar noted that the inventories data may raise second quarter GDP estimates by one to two tenths if confirmed by the overall business inventories report due to be released on Thursday.

Among individual stocks, shares of Pep Boys (PBY) moved sharply higher on the day after the auto parts retailer reported weaker than expected first quarter earnings but forecast stronger tire sales in the second half of the year.

Chico's FAS (CHS) also turned in a strong performance after the Financial Times reported that the women's apparel retailer is considering selling itself to private equity firms.

On the other hand, shares of RadioShack (RSH) came under pressure after the electronics retailer reported a much wider than expected first quarter loss.

Sector News

Contributing to the lackluster close by the broader markets, most of the major sectors ended the day showing only modest moves.

Gold stocks saw significant strength, however, with the NYSE Arca Gold Bugs Index jumping by 2.3 percent. The strength in the sector came as gold for August delivery rose $6.20 to $1,260.10 an ounce.

Pharmaceutical stocks also saw some strength on the day, while weakness was visible among steel and commercial real estate stocks.

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 fell by 0.9 percent, while Hong Kong's Hang Seng Index advanced by 0.9 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index closed just below the unchanged line, the French CAC 40 Index and the German DAX Index edged up by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries extended their recent downward trend with a modest move to the downside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by 2.2 basis points to 2.635 percent.

Looking Ahead

Wednesday represents another relatively quiet day on the U.S. economic front, potentially leading to another choppy trading day.