Major Averages Close Mixed As Boeing Weighs On Dow - U.S. Commentary

wallstreet july23 12mar19

Following the rally seen in the previous session, the major averages moved in opposite directions during trading on Tuesday. While the Dow pulled back, the broader Nasdaq and S&P 500 extended yesterday's strong upward move.

The major averages eventually ended the session mixed. The Dow fell 96.22 points or 0.4 percent to 25,554.66, while the Nasdaq climbed 32.97 points or 0.4 percent to 7,591.03 and the S&P 500 rose 8.22 points or 0.3 percent to 2,791.52.

The loss posted by the Dow was largely due to a continued decline by Boeing (BA), with the aerospace giant tumbling by 6.2 percent after slumping by 5.3 percent on Monday.

The continued drop by Boeing came after the European Union, China, the U.K. and other countries grounded the company's 737 MAX jets following the second crash in less than 6 months.

Meanwhile, the broader markets benefited from the release of tame inflation data, which suggests the Federal Reserve will continue to refrain from raising interest rates in the near future.

After reporting no change in consumer prices over the past few months, the Labor Department released a report showing a modest increase in consumer prices in the month of February.

The Labor Department said its consumer price index rose by 0.2 percent in February after coming in unchanged for three straight months. The uptick in consumer prices matched economist estimates.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in February after rising by 0.2 percent in January. Economists had expected another 0.2 percent increase in prices.

The report also said the annual rate of consume price growth slowed to 1.5 percent in February from 1.6 percent in November, while the annual rate of core consumer price growth edged down to 2.1 percent from 2.2 percent.

With consumer price growth slowing, Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The Fed would appear to be justified in supporting the real economy by being patient and leaving interest rates on hold for a potentially extended period."

Sector News

Natural gas stocks showed a significant move to the upside over the course of the session, resulting in a 2.5 percent jump by the NYSE Arca Natural Gas Index.

The strength in the natural gas sector came amid an increase by the price of the commodity, with natural gas for April delivery rising $0.012 to $2.784 per million BTUs.

Considerable strength was also visible among oil service stocks, which remained firmly positive even as the price of crude oil pulled back well off its highs. Reflecting the strength in the sector, the Philadelphia Oil Service Index surged up by 2.5 percent.

Gold stocks also saw substantial strength on the day, benefiting from a rebound by the price of the precious metal.

With gold for April delivery climbing $7.50 to $1,296.30 an ounce, the NYSE Arca Gold Bugs Index shot up by 2.4 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index spiked by 1.8 percent, while Hong Kong's Hang Seng Index surged up by 1.5 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index dipped by 0.2 percent, the French CAC 40 Index inched up by 0.1 percent and the U.K.'s FTSE 100 Index rose by 0.3 percent.

In the bond market, treasuries moved notably higher over the course of the trading session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.8 basis points to a two-month closing low of 2.605 percent.

Looking Ahead

A batch of U.S. economic data may attract attention on Wednesday, with traders likely to keep an eye on reports on durable goods orders, producer prices, and construction spending.

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