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U.S. Stocks Close Slightly Lower Following Choppy Trading Day

wallst 032918 26jan21 lt

Following the mixed performance seen in the previous session, stocks showed a lack of direction over the course of the trading day on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day modestly lower. The Dow slipped 22.96 points or 0.1 percent to 30,937.04, the Nasdaq edged down 9.93 points or 0.1 percent to 13,626.07 and the S&P 500 dipped 5.74 points or 0.2 percent to 3,849.62.

The choppy trading on Wall Street partly reflected uncertainty about the near-term outlook for the markets after the Nasdaq and the S&P 500 climbed to new record closing highs on Monday.

Optimism about additional stimulus under President Joe Biden has helped drive stocks higher in recent sessions, although reports have pointed to intensifying opposition from GOP lawmakers.

The Biden administration has signaled a willingness to negotiate over the president's $1.9 trillion proposal, but it is worth noting that talks over the previous relief package dragged on for months.

Traders may also have been reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but many expect the central bank to provide additional guidance about its bond purchasing program.

The lackluster performance on the day also reflected a mixed reaction to earnings news from a number of big-name companies.

3M (MMM) and Johnson & Johnson (JNJ) moved notably higher after reporting quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, fellow Dow components American Express (AXP) and Verizon (VZ) moved to the downside despite reporting better than expected fourth quarter earnings.

Shares of General Electric (GE) moved higher after the industrial conglomerate reported a surge in fourth quarter net profits amid better than expected revenues and cash flow.

Meanwhile, traders have largely shrugged off a report from the Conference Board showing an unexpected improvement in U.S. consumer sentiment in the month of January.

The Conference Board said its consumer confidence index climbed to 89.3 in January from a downwardly revised 87.1 in December.

The increase surprised economists, who had expected the index to edge down to 88.5 from the 88.6 originally reported for the previous month.

Sector News

Despite the lackluster performance by the broader markets, biotechnology stocks showed a substantial move to the downside on the day.

The NYSE Arca Biotechnology Index tumbled by 2.3 percent after reaching a new record intraday high in early trading.

Significant weakness was also visible among energy stocks, which moved lower amid a modest decrease by the price of crude oil. Crude for March delivery dipped $0.16 to $52.61 a barrel.

Housing, transportation and semiconductor stocks also saw notable weakness on the day, while telecom stocks moved sharply higher, driving the NYSE Arca North American Telecom Index up by 2.4 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slumped by 1 percent, while Hong Kong's Hang Seng Index plunged by 2.6 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index surged up by 1.7 percent, the French CAC 40 Index advanced by 0.9 percent and the U.K.'s FTSE 100 Index edged up by 0.2 percent.

In the bond market, treasuries showed a lack of direction after moving notably higher in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 1.040 percent.

Looking Ahead

Earnings news is likely to help driving trading on Wednesday, with Microsoft (MSFT), Advanced Micro Devices (AMD), Capital One (COF), and Starbucks (SBUX) among the companies releasing their quarterly results after the close of today's trading.

AT&T (T), Boeing (BA), Corning (GLW), General Dynamics (GD), Norfolk Southern (NSC) and Progressive (PGR) are also among the companies due to report their results before the start of trading on Wednesday.

The Fed announcement is also likely to be in the spotlight, overshadowing a report on durable goods orders in the month of December.

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