After moving mostly lower over the course of the previous session, stocks showed a lack of direction throughout the trading on Tuesday. The choppy trading came as traders expressed uncertainty about the near-term outlook for the markets.
The major averages eventually ended the day mixed, although they were all nearly flat. While the Dow inched up 11.54 points or 0.1 percent to 13,564.64, the Nasdaq edged down 0.87 points or less than a tenth of a percent to 3,177.80 and the S&P 500 slipped 1.87 points or 0.1 percent to 1,459.32.
While profit taking helped to drag stocks lower at the start of trading, selling pressure waned not long after the open as traders seemed reluctant to sell stocks and miss out on any further upside.
Uncertainty about the effectiveness of the Federal Reserve's recently announced third round of quantitative easing also helped to keep traders on the sidelines, contributing to the lackluster performance.
Traders largely shrugged off a report from the National Association of Home Builders showing that homebuilder confidence improved for the fifth straight month in September and reached a six-year high.
The report showed that the NAHB/Wells Fargo Housing Market Index rose to 40 in September from 37 in August. Economists had been expecting the index to show a more modest increase to a reading of 38.
With the much bigger than expected increase, the index rose to its highest level since coming in at 42 in June of 2006.
Among individual stocks, shares of FedEx (FDX) came under pressure on the day, with the delivery giant falling by 3.1 percent after cutting its full-year earnings guidance.
FedEx reported first quarter earnings that came in above its downwardly revised guidance but said it now expects to report full year earnings of $6.20 to $6.60 per share compared to its previous forecast for $6.90 to $7.40 per share.
Chip maker Advanced Micro Devices (AMD) also posted a notable loss after Thomas Seifert informed the company of his decision to resign as senior vice president and chief financial officer to pursue other opportunities.
Meanwhile, shares of Dole (DOLE) moved moderately higher after the food company said it has agreed to sell its worldwide packaged foods and Asia fresh produce businesses to Japanese trading company Itochu Corp. (ITOCY) for $1.7 billion in cash.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index ended the day down by 0.3 percent.
The major European markets also moved to the downside on the day. The U.K.'s FTSE 100 Index edged down by 0.4 percent, the German DAX Index dropped by 0.8 percent and the French CAC 40 Index tumbled by 1.2 percent.
In the bond market, treasuries moved moderately higher, climbing further off their recent lows. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 1.812 percent.
Despite the lack of direction shown by the broader markets, airline stocks saw substantial weakness on the day. Reflecting the weakness in the airline sector, the NYSE Arca Airline Index fell by 1.9 percent, pulling back further off last Thursday's nearly two-month closing high.
Republic Airways (RJET) helped to lead the airline sector lower, with the regional airline tumbling by 5.9 percent after ending the previous session at its best closing level in almost a month.
Significant weakness was also visible among oil service stocks, which moved lower along with the price of crude oil. With crude for October delivery sliding $1.33 to $95.29 a barrel, the Philadelphia Oil Service Index ended the day down by 1 percent.
While natural gas and commercial real estate stocks also moved to the downside, tobacco stocks moved notably higher on the day. The NYSE Arca Tobacco Index advanced by 1.3 percent amid strong gains by British American Tobacco (BTI) and Lorillard (LO).
Additional housing data is due to be released on Wednesday, with the Commerce Department scheduled to release its report on new residential construction and the National Association of Realtors due to release its report on existing home sales.
by RTT Staff Writer
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