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U.S. Stocks Give Back Ground After Seeing Initial Strength

wallstreet aug29 14sep21 lt

After moving higher at the start of trading on Tuesday, stocks have given back ground over the course of the morning. The major averages have pulled back off their highs of the young session and into negative territory.

Currently, the Dow is down 137.64 points or 0.4 percent at 34,731.99 after snapping a five-session losing streak on Monday. The S&P 500 is also down 9.13 points or 0.2 percent at 4,459.60, while the Nasdaq has been bouncing back and forth across the unchanged line and is currently down just 1.66 points at 15,103.92.

Stocks initially benefited from a positive reaction to a highly anticipated Labor Department report showing consumer prices increased by slightly less than expected in the month of August.

The Labor Department said its consumer price index rose by 0.3 percent in August after climbing by 0.5 percent in July. Economists had expected consumer prices to increase by 0.4 percent.

Excluding food and energy prices, core consumer prices inched up by just 0.1 percent in August after rising by 0.3 percent in July. Economists had been expecting another 0.3 percent increase.

The report also showed a slowdown in the annual rate of consumer price growth, which dipped to 5.3 percent in August from 5.4 percent in July.

The annual rate of core consumer price growth also slowed to 4.0 percent in August from 4.3 percent in the previous month.

The relatively tame inflation data initially generated optimism that the Federal Reserve may delay plans to begin scaling back stimulus.

However, subsequent comments from economists have suggested that the Fed is still likely to begin tapering its asset purchases as soon as December.

The Fed is scheduled to hold a monetary policy meeting next week, with many expecting the central bank to provide an update on the outlook for its asset purchase program.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Steel stocks have shown a significant move to the downside, however, with the NYSE Arca Steel Index falling by 1.8 percent.

Airline, natural gas and networking stocks have also moved lower over the course of the morning, while some strength is visible among software stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.7 percent, while China's Shanghai Composite Index tumbled by 1.4 percent.

The major European markets have also turned mixed on the day. While the German DAX Index has inched up by 0.1 percent, the French CAC 40 Index is down by 0.4 percent and the U.K.'s FTSE 100 Index is down by 0.5 percent.

In the bond market, treasuries have shown a strong move to the upside following the consumer price inflation data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.7 basis points at 1.277 percent.

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