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U.S. Finish Choppy Trading Session Modestly Higher

wallstreet up 032918 17sep19 lt

Stocks showed a lack of direction throughout much of the trading day on Tuesday as traders looked ahead to the Federal Reserve's monetary policy announcement on Wednesday. The major averages spent most of the session bouncing back and forth across the unchanged line.

The major averages moved to the upside going into the close, ending the day in positive territory. The Dow inched up 33.98 points or 0.1 percent to 27,110.80, the Nasdaq climbed 32.47 points or 0.4 percent to 8,186.02 and the S&P 500 rose 7.74 points or 0.3 percent to 3,005.70.

The choppy trading seen for most of the session came as traders seemed reluctant to make significant moves ahead of tomorrow's monetary policy decision.

The Fed is widely expected to lower interest rates by another 25 basis points, with traders likely to pay closer attention to the accompanying statement for clues about the long-term outlook for rates.

Uncertainty about the U.S. response to the recent attacks on Saudi Arabian oil facilities also kept some traders on the sidelines.

President Donald Trump has indicated the U.S. is prepared to respond militarily but has stopped short of definitively blaming Iran for the attacks.

Trump told reporters diplomacy has not been exhausted when it comes to Iran and would not rule out meeting with Iranian President Hassan Rouhani on the sidelines of the United Nations General Assembly next week.

On the U.S. economic front, the Fed released a report showing industrial production rebounded by much more than anticipated in the month of August.

The report said industrial production climbed by 0.6 percent in August after edging down by a revised 0.1 percent in August.

Economists had expected industrial production to rise by 0.2 percent compared to the 0.2 percent dip originally reported for the previous month.

A separate report from the National Association of Home Builders showed an unexpected improvement in U.S. homebuilder confidence in the month of September.

The report said the NAHB/Wells Fargo Housing Market Index inched up to 68 in September from an upwardly revised August reading of 67.

Economists had expected the index to come in unchanged compared to the 66 originally reported for the previous month.

Sector News

Most of the major sectors ended the day showing only modest moves, although considerable strength was visible among gold stocks.

The NYSE Arca Gold Bugs Index surged up by 3 percent, continuing to recover after ending last Friday's trading at its lowest closing level in over a month.

The jump by gold stocks came amid a modest increase by the price of the precious metal, with gold for December delivery rising $1.90 to $1,513.40 an ounce.

On the other hand, energy stocks pulled back sharply after yesterday's rally, moving back to the downside along with the price of crude oil.

Crude oil for October delivery plunged $3.45 to $58.57 a barrel after skyrocketing $8.05 to $62.90 a barrel on Monday.

Oil prices came under pressure after a report from Reuters said Saudi oil production will be restored faster than initially expected.

Reflecting the sell-off by energy stocks, the Philadelphia Oil Service Index plummeted by 5 percent, the NYSE Arca Natural Gas Index tumbled by 3.6 percent and the NYSE Arca Oil Index slumped by 1.7 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index tumbled by 1.2 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index rose by 0.2 percent, the U.K.'s FTSE 100 Index closed just below the unchanged line and the German DAX Index edged down by 0.1 percent.

In the bond market, treasuries extended yesterday's recovery as traders looked ahead to tomorrow's Fed decision. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.812 percent.

Looking Ahead

The Fed's monetary policy announcement is likely to be in the spotlight on Wednesday, overshadowing a report on new residential construction.

On the earnings front, Adobe Systems (ADBE) and FedEx (FDX) are releasing their quarterly results after the close of today's trading.

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