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Dow Climbs Firmly Into Positive Territory, Nasdaq Nearly Unchanged

wallstreet oct19 04aug20 lt

After showing a lack of direction early in the session, stocks continue to turn in a relatively lackluster performance in mid-day trading on Tuesday. The Nasdaq and the S&P 500 are showing only modest moves, although the narrower Dow has climbed more firmly into positive territory.

The Dow, which has recently underperformed the other major averages, is currently up 118.86 points or 0.5 percent at 26,783.26. The S&P 500 is also up 6.65 points or 0.2 percent at 3,301.26, while the Nasdaq is down 1.81 points or less than a tenth of a percent at 10,900.99.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets after the tech-heavy Nasdaq reached a new record closing high on Monday. The S&P 500 also finished Monday's trading at its best closing level since February.

Traders cashed in on some of the recent strength in the markets early in the session, although selling pressure waned shortly after the open amid worries about missing out on further upside.

Uncertainty about the prospects for a new coronavirus relief bill may also be keeping traders on the sidelines, as negotiators struggle to reach an agreement even as new cases continue to spike and enhanced unemployment benefits expired last week.

Democrats and Trump administration officials said they made progress towards a deal during a meeting on Monday, but House Speaker Nancy Pelosi, D-Calif., noted the two sides "still have our differences."

The amount of the federal unemployment benefit remains a key sticking point, as Republicans want to slash the benefit to $200 per week and Democrats want to keep the benefit at $600 per week.

A disagreement over funding for state and local governments is also holding up a deal, with President Donald Trump accusing Democrats of seeking to bail out poorly run Democratic-run states and cities.

On the U.S. economic front, the Commerce Department released a report showing another substantial increase in new orders for manufactured goods in the month of June.

The Commerce Department said factory orders soared by 6.2 percent in June after skyrocketing by a revised 7.7 percent in May.

Economists had expected factory orders to jump by 5.0 percent compared to the 8.0 percent spike originally reported for the previous month.

Sector News

While many of the major sectors are showing only modest moves on the day, airline stocks continue to see substantial strength in mid-day trading.

Reflecting the strength in the sector, the NYSE Arca Airline Index has surged up by 2.9 percent after ending the previous session at a two-month closing low.

Natural gas stocks have also moved sharply higher over the course of the session, driving the NYSE Arca Natural Gas Index up by 2.8 percent to its best intraday level in over a month.

The strength among natural gas stocks comes amid a notable increase by the price of the commodity, with natural gas for September delivery climbing $0.054 to $2.155 per million BTUs.

Gold, oil, and commercial real estate stocks are also seeing considerable strength on the day, while software stocks are giving back ground after helping to lead the rally in the previous session.

After soaring by 3.8 percent to a record closing high on Monday, the Dow Jones U.S. Software Index is slumping by 1.8 percent.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved sharply higher during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1.7 percent, while Hong Kong's Hang Seng Index spiked by 2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index fell by 0.4 percent, the U.K.'s FTSE 100 Index inched up by 0.1 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries are showing a notable rebound following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.3 basis points at 0.520 percent.

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