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Stocks Close Mixed Ahead Of Fed Announcement - U.S. Commentary

With traders reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday, stocks turned in a relatively lackluster performance during trading on Tuesday, ending the day mixed.

The major averages closed on opposite sides of the unchanged line, with the Nasdaq posting a modest loss. While the Nasdaq fell 8.85 points or 0.3 percent to 2,961.60, the Dow rose 74.39 points or 0.6 percent to 13,001.56 and the S&P 500 climbed 5.03 points or 0.4 percent to 1,371.97.

The choppy trading on Wall Street came as many traders remained on the sidelines ahead of the Fed announcement and Chairmen Ben Bernanke's accompanying press conference on Wednesday.

The Fed is widely expected to leave interest rates at near-zero levels, but traders will pay close attention to any comments regarding the outlook for further quantitative easing.

A mixed batch of economic data also contributed to the lackluster performance, with a report from the Commerce Department showing that new home sales fell in the month of March but still came in well above economist estimates.

The report showed that new home sales fell 7.1 percent to an annual rate of 328,000 in March from an upwardly revised February rate of 353,000. Despite the drop, sales came in above economist estimates for a rate of 318,000.

A separate report from the Conference Board showed that U.S. consumer confidence was virtually unchanged in the month of April

The Conference Board said its consumer confidence index edged down to 69.2 in April from a downwardly revised 69.5 in March. Economists had expected the index to slip to 69.7 from the 70.2 originally reported for the previous month.

Among individual stocks, telecom giant AT&T (T) rose by 3.6 percent after reporting first quarter earnings that exceeded analyst estimates

Diversified manufacturer 3M (MMM) also closed higher after the Dow component reported better than expected first quarter earnings. The company also tightened the guidance range for its full-year earnings.

On the other hand, shares of Netflix (NFLX) came under pressure after the company reported a narrower than expected first quarter loss but forecast slower subscriber growth for its U.S. video-streaming service.

Tech giant Apple (AAPL) also closed in the red, ending the day down by 2 percent ahead of the release of its fiscal second quarter results after the close of trading.

Sector News

Despite the choppy trading, housing stocks saw considerable strength amid a positive reaction to the new home sales report. Reflecting the strength in the housing sector, the Philadelphia Housing Sector Index surged up by 3 percent.

Networking stocks also showed a strong upward move on the day, driving the NYSE Arca Networking Index up by 1.8 percent. Juniper Networks (JNPR) helped to lead the sector higher after reporting better than expected first quarter earnings ahead of schedule.

Railroad, commercial real estate, and defense stocks also saw considerable strength, although buying interest was somewhat subdued.

Meanwhile, health insurance stocks posted steep losses on the day, resulting in a 1.5 percent drop by the Morgan Stanley Healthcare Payor Index. Internet and software stocks also came under pressure.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. While Japan's Nikkei 225 Index fell by 0.8 percent, Hong Kong's Hang Seng Index ended the day up by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. The French CAC 40 Index jumped by 2.3 percent, while the German DAX Index advanced by 1 percent, and the U.K.'s FTSE 100 Index rose by 0.8 percent.

In the bond market, treasuries gave back some ground following yesterday's strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 1.961 percent.

Looking Ahead

While the monetary policy announcement from the Fed is likely to be in focus on Wednesday, traders are also likely to keep an eye on the Commerce Department's report on durable goods orders. Early trading could also be impacted by reaction to the quarterly results from Apple.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

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