Stocks Come Under Pressure Amid Continued Washington Bickering - U.S. Commentary

(RTTNews) - With lawmakers continuing to struggle to reach an agreement to end the latest fiscal crisis, stocks moved mostly lower over the course of the trading day on Tuesday. The pullback on the day offset the upward move seen in the previous session.

The major averages ended the day firmly in negative territory, near their lows for the session. The Dow tumbled 133.25 points or 0.9 percent to 15,168.01, the Nasdaq slid 21.26 points or 0.6 percent to 3,794.01 and the S&P 500 slid 12.08 points or 0.7 percent to 1,698.06.

The weakness on Wall Street came as the latest developments in Washington led to renewed concerns about whether Congress can reach an agreement to avoid default.

While Senate leaders seemed to be making progress toward a deal, reports regarding a separate House proposal ramped up the rhetoric on Capitol Hill.

Senate Majority Leader Harry Reid, D-Nev., quickly lashed out at the plan reportedly being offered by House Republicans, claiming that it would be dead on arrival in the Senate.

The House proposal would reportedly fund the government and raise the debt limit for similar lengths of time as the Senate's proposal, but it would also make changes to Obamacare and prevent the Treasury from using "extraordinary measures" to avert default.

Reid described the legislation reportedly being considered by House Republicans as a "blatant attack on bipartisanship."

Meanwhile, House Speaker John Boehner, R-Ohio, claimed that there have been no decisions about what exactly the House will do.

Subsequent reports have suggested that the negotiations in the Senate have been put on hold while the House decides how to proceed.

Among individual stocks, financial services giant Citigroup (C) came under pressure on the day after reporting weaker than expected third quarter results.

Shares of Coca-Cola (KO) also ended the day in the red even after the beverage giant reported third quarter earnings growth that matched analyst estimates.

Meanwhile, Johnson & Johnson (JNJ) closed modestly higher after reporting better than expected third quarter earnings and raising its full-year earnings guidance.

Sector News

Defense stocks showed a significant move to the downside on the day, dragging the Philadelphia Defense Sector Index down by 2.3 percent. With the loss, the index pulled back off the nearly one-month closing high set on Friday.

FLIR Systems (FLIR) helped to lead the defense sector lower, with the maker of thermal imaging systems plummeting by 13.8 percent after cutting its full-year guidance.

Considerable weakness was also visible among housing stocks, as reflected by the 2 percent loss posted by the Philadelphia Housing Sector Index. KB Home (KBH) and D.R. Horton (DHI) turned in two of the sector's worst performances.

Networking stocks also came under significant selling pressure, resulting in a 1.9 percent drop by the NYSE Arca Networking Index. Alcatel-Lucent (ALU) fell by 4 percent after its CEO warned that the company could go out of business if it doesn't cut costs and jobs.

Utilities, health insurance, and computer hardware stocks also saw notable weakness on the day, moving lower along with most of the other major sectors.

Meanwhile, gold stocks bucked the downtrend by the broader markets, with the NYSE Arca Gold Bugs Index surging up by 3 percent. Steel stocks also saw some strength on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index ended the day up by 0.5 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed by 0.6 percent, the French CAC 40 Index and the German DAX Index advanced by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries climbed off their worst levels going into the close but remained in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to 2.72 percent.

Looking Ahead

Developments in Washington are likely to remain in focus on Wednesday as the deadline to raise the debt ceiling draws ever closer.

The ongoing fiscal crisis is likely to overshadow the release of a report on homebuilder confidence as well as the Federal Reserve's Beige Book.

On the earnings front, Intel (INTC) and Yahoo (YHOO) are among the companies releasing their quarterly results after the close of today's trading, while Bank of America (BAC), PepsiCo (PEP), and Mattel (MAT) are due to report their results before the start of trading on Wednesday.