Stocks See Further Downside Following Early Decline - U.S. Commentary

(RTTNews) - After moving modestly lower early in the session, stocks have seen some further downside over the course of the trading day on Tuesday. With the losses on the day, the major averages are moving lower for the fourth straight session.

Currently, the major averages are off their worst levels of the day but still firmly in negative territory. The Dow is down 98.03 points or 0.6 percent at 17,634.45, the Nasdaq is down 25.23 points or 0.5 percent at 4,823.21 and the S&P 500 is down 10.87 points or 0.5 percent at 2,068.19.

The weakness on Wall Street comes as traders are expressing 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 are also weighing 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

Gold stocks have shown a significant move to the downside over the course of the trading session, dragging the NYSE Arca Gold Bugs Index down by 2.9 percent. The index continues to give back ground after ending last Thursday's trading at its best closing level in well over a year.

The weakness among gold stocks comes amid a modest decrease by the price of the precious metal, with gold for August delivery slipping $2.90 to $1,284 an ounce.

Considerable weakness is also visible among steel stocks, as reflected by the 2.9 percent drop by the NYSE Arca Steel Index. AK Steel (AKS), U.S. Steel (X), and Cliffs Natural Resources (CLF) are posting notable losses.

Airline stocks have also come under pressure on the day, dragging the NYSE Arca Airline Index down by 2.5 percent. With the drop, the index has fallen to its lowest intraday level in well over three months.

Banking, trucking, and housing stocks are also seeing significant weakness in mid-day trading, moving lower along with most of the other major sectors.

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 are seeing modest strength, extending a recent upward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.2 basis points at 1.604 percent.