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Major Averages Close Mixed For Second Straight Day - U.S.Commentary


Stocks fluctuated over the course of the trading day on Tuesday, extending the volatile performance seen in the previous session. The major averages spent the session bouncing back and forth across the unchanged line before closing mixed for the second straight day.

While the tech-heavy Nasdaq inched up 2.07 points or less than a tenth of a percent to 7,738.02, the Dow dipped 56.21 points or 0.2 percent to 26,430.57 and the S&P 500 edged down 4.09 points or 0.1 percent to 2,880.34.

The choppy trading on Wall Street came as traders kept an eye on treasuries amid renewed concerns about the outlook for interest rates.

With the bond markets re-opening following the Columbus Day holiday on Monday, treasury yields turned lower over the course of the session after initial moving higher.

Recent upbeat economic data pushed the yield on the benchmark ten-year note to its highest levels in over seven year last Friday.

Meanwhile, traders largely shrugged off news the International Monetary Fund lowered its forecast for U.S. and Chinese economic growth.

Citing the "negative effect of recent tariff actions," the IMF said economic growth in the U.S. and China is now expected to slow to 2.5 percent and 6.2 percent, respectively, next year.

Overall trading activity was somewhat subdued, as a lack of major U.S. economic data kept some traders on the sidelines following the holiday on Monday.

In the coming days, traders are likely to keep a close eye on reports on producer and consumer prices as well as comments by several Federal Reserve officials.

Sector News

Most of the major sectors ended the day showing only modest moves, although substantial weakness was visible among chemical stocks. Reflecting the weakness in the chemical sector, the S&P Chemical Sector Index plunged by 3.6 percent to its lowest closing level in five months.

PPG Industries (PPG) led the chemical sector lower after warning of weaker than expected third quarter results due in part to higher raw material and logistics costs.

Significant weakness also emerged among housing stocks, as reflected by the 1.9 percent slump by the Philadelphia Housing Sector Index. With the drop, the index fell to a one-year closing low.

Transportation and gold stocks also moved notably lower on the day, while energy stocks moved higher along with the price of crude oil. Crude for November delivery climbed $0.67 to $74.96 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while Hong Kong's Hang Seng Index dipped by 0.1 percent.

Meanwhile, the major European markets moved higher over the course of the session. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the German DAX Index and the French CAC 40 Index rose by 0.3 percent and 0.4 percent, respectively.

In the bond market, treasuries recovered from initial weakness to end the day modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.7 basis points to 3.208 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the Labor Department's report on producer prices in the month of September.

Producer prices are expected to rise by 0.2 percent in September after slipping by 0.1 percent in August. Core producer prices, which exclude food and energy prices, are also expected to tick up by 0.2 percent.

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