After showing a lack of direction throughout morning trading on Monday, stocks moved mostly lower over the course of the trading day. Apprehension ahead of the Federal Reserve's upcoming monetary policy meeting contributed to the weakness that emerged on Wall Street.
The major averages all eventually ended the day firmly in negative territory. The Dow fell 52.35 points or 0.4 percent to 13,254.29, the Nasdaq dropped 32.40 points or 1 percent to 3,104.02 and the S&P 500 slid 8.84 points or 0.6 percent to 1,429.08.
The pullback seen over the course of the session came as some traders cashed in on the recent strength in the markets ahead of the Fed's two-day monetary policy meeting.
The Fed is due to announce its latest decision on monetary policy Thursday afternoon followed by a news conference by Chairman Ben Bernanke.
Uncertainty about whether the Fed will announce another round of quantitative easing helped to drag stocks lower, although selling pressure remained relatively subdued.
Some negative sentiment was also generated by disappointing trade data from China, with a report showing an unexpected year-over-year drop in imports in the month of August.
Ahead of the announcement from the Fed, traders are likely to keep a close eye on Europe, as Germany's Constitutional Court is expected to rule on a request for a temporary injunction against Europe's permanent bailout fund.
Developments in Greece are also likely to remain in focus, with Greek Prime Minister Antonis Samaras reportedly having trouble getting the country's lenders to sign off on his government's proposed budget cuts.
Among individual stocks, shares of Titan Machinery (TITN) fell sharply after the farm equipment retailer reported weaker than expected second quarter earnings and cut its full-year guidance. Titan tumbled by 23.5 percent on the day.
Apparel retailer Michael Kors (KORS) also posted a notable loss after filing a registration statement with the SEC related to a proposed public offering of 20 million ordinary shares by certain shareholders.
In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance before ending Monday's trading mixed. While Japan's Nikkei 225 Index closed just below the unchanged line, Hong Kong's Hang Seng Index edged up by 0.1 percent.
Meanwhile, the major European markets ended the day modestly lower. The French CAC 40 Index fell by 0.4 percent, while the U.K.'s FTSE 100 Index and the German DAX Index both closed just below the unchanged line.
In the bond market, treasuries saw modest weakness ahead of the closely watched Fed meeting. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 1.683 percent.
Gold stocks showed a notable move to the downside over the course of the trading day, dragging the NYSE Arca Gold Bugs Index down by 1.7 percent. The loss by the index came after it ended last Friday's trading at a nearly six-month closing high.
The pullback by gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $8.70 to $1,734.10 an ounce.
Considerable weakness also emerged among semiconductor stocks, as reflected by the 1.7 percent loss posted by the Philadelphia Semiconductor Index. Spreadtrum Communications (SPRD) and Mellanox Technologies (MLNX) turned in two of the sector's worst performances
Health insurance, networking, and financial stocks also came under pressure as the day progressed, while some transportation stocks bucked the downtrend.
Any news from overseas is likely to be in focus on Tuesday amid a relatively light day on the U.S. economic front. Nonetheless, a report on the U.S. trade balance may attract some attention.
by RTT Staff Writer
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