Stocks turned lower over the course of the trading day on Tuesday after failing to sustain an early upward move. The downturn came as some traders cashed in on the recent strength in the markets, although selling pressure remained relatively subdued.
The major averages ended the day firmly in negative territory but off their worst levels of the day. The Dow fell 68.06 points or 0.5 percent to 13,203.58, the Nasdaq slipped 8.95 points or 0.3 percent to 3,067.26 and the S&P 500 dropped 4.96 points or 0.4 percent to 1,413.17.
The early strength on Wall Street was partly due to optimism about the financial situation in Europe amid reports that the European Central Bank is considering buying bonds from troubled eurozone countries such as Italy and Spain in order to reduce borrowing costs.
Optimism about potential progress on addressing the Greek debt crisis also generated some buying interest, with Eurogroup chief Jean-Claude Juncker due to meet with Greek Prime Minister Antonis Samaras in Athens on Wednesday.
Nonetheless, the markets were unable to sustain the early upward move, as traders seemed somewhat reluctant to continue buying stocks following recent strength.
A lack of major U.S. economic data also contributed to the lack of follow-through and some traders subsequently looked to cash in on the early gains, which lifted the S&P 500 to its highest intraday level in over four years.
Among individual stocks, shares of Best Buy (BBY: Quote) ended the day in the red after the consumer electronic retailer reported second quarter earnings that fell by much more than anticipated. The company also suspended its earnings guidance.
Bookstore operator Barnes & Noble (BKS: Quote) also moved lower despite reporting a much narrower than expected first quarter loss. The company said it benefited from strong sales of the Fifty Shades series.
On the other hand, shares of Urban Outfitters (URBN: Quote) moved sharply higher after the apparel retailer reported better than expected second quarter results.
While many of the major sectors ended the day showing only modest moves, computer hardware stocks came under pressure over the course of the session. The NYSE Arca Computer Hardware Index ended the day down by 1 percent after reaching a nearly three-month intraday high in early trading.
Dell (DELL: Quote) turned in one of the hardware sector's worst performances, with the PC giant falling by 1.8 percent ahead of the release of its second quarter results after the close of today's trading.
Tobacco stocks also showed a notable move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 1.1 percent. Altria (MO: Quote) and Lorillard (LO: Quote) posted notable losses.
Telecom, internet, and housing stocks also saw moderate weakness on the day, although selling pressure remained relatively subdued.
On the other hand, gold stocks held on to strong gains, resulting in a 1.7 percent gain by the NYSE Arca Gold Bugs Index. The strength among gold stocks came as gold for December delivery jumped $19.90 to a three-month closing high of $1,642.90 an ounce.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. China's Shanghai Composite Index and Australia's All Ordinaries Index rose by 0.5 percent and 0.4 percent, respectively, while Japan's Nikkei 225 Index bucked the uptrend and dipped by 0.2 percent.
The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.6 percent, the German DAX Index and the French CAC 40 Index closed up by 0.8 percent and 0.9 percent, respectively.
In the bond market, treasuries recovered from early weakness to close roughly flat for the second straight day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.805 percent.
Following two light day on the U.S. economic front, trading on Wednesday could be impacted by a report on existing home sales as well as the release of the minutes of the Federal Reserve's latest monetary policy meeting.
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by RTT Staff Writer
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