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Stocks Seeing Modest Weakness In Mid-Day Trading - U.S. Commentary

While selling pressure has remained subdued, stocks have moved mostly lower over the course of the trading day on Tuesday. The markets are giving back some ground after showing a strong upward move in the previous session.

The major averages have moved to the downside in recent trading and are currently posting modest losses. The Dow is down 47.53 points or 0.4 percent at 13,216.96, the Nasdaq is down 3.68 points or 0.1 percent at 3,116.02 and the S&P 500 is down 5.19 points or 0.4 percent at 1,413.85.

The modest weakness that has emerged on Wall Street is partly due to profit taking, with traders cashing in on yesterday's gains, which lifted the Dow to a new four-year closing high. The S&P 500 also reached its best closing level since May of 2008.

Nonetheless, trading activity remains light ahead of the release of the minutes of the March Federal Reserve meeting, which are scheduled to be released at 2 pm ET.

The minutes of the meeting are likely to be closely scrutinized for indications regarding the likelihood of further quantitative easing by the central bank.

On the economic front, the Commerce Department released a report showing that factory orders rebounded by slightly less than expected in the month of February.

The report showed that new orders for manufactured goods rose by 1.3 percent in February following a 1.1 percent drop in January. Economists had expected orders to increase by about 1.5 percent.

Traders are also digesting the release of monthly sales results from the nation's major auto manufacturers, with sales rising due in part to increased demand for smaller cars amid the recent surge in gas prices.

Chrysler reported a 34 percent jump in auto sales in March, while General Motors (GM) said its sales rose by 12 percent and Ford (F) said its sales increased by 5 percent.

Meanwhile, Molson Coors Brewing (TAP) is down by 3.2 percent after the company announced an agreement to acquire European brewer StarBev for approximately $3.5 billion.

Sector News

While most of the major sectors are showing only modest moves, considerable weakness has emerged among gold stocks, as reflected by the 1.5 percent loss being posted by the NYSE Arca Gold Bugs Index. The loss by the index comes after it closed higher in each of the three previous sessions.

The weakness in the gold sector comes amid a decrease by the price of the precious metal, with gold for June delivery sliding $3.60 to $1,676.10 an ounce.

Steel, brokerage, and energy stocks have also come under pressure on the day, with energy stocks moving lower along with the price of crude oil.

On the other hand, airline stocks are seeing continued strength, resulting in a 1 percent gain by the NYSE Arca Airline Index. Strength is also visible among healthcare and biotech stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, although Japan's Nikkei 225 Index bucked the uptrend and fell by 0.6 percent. Hong Kong's Hang Seng Index jumped 1.3 percent, while Australia's All Ordinaries Index edged up by 0.2 percent.

Meanwhile, the major European markets turned lower over the course of the trading day. While the U.K.'s FTSE 100 Index fell by 0.6 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.1 percent and 1.6 percent, respectively.

In the bond market, treasuries are seeing modest strength, adding to the gains posted in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.4 basis points at 2.159 percent.

by RTT Staff Writer

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