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Major Averages Close Mixed Following Choppy Trading Day - U.S. Commentary


Stocks showed a lack of direction over the course of the trading session on Tuesday following the strong upward move seen in the previous session. While the Dow remained in negative territory, the broader Nasdaq and the S&P 500 spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the session mixed. The Dow slipped 79.29 points or 0.3 percent to 26,179.13, but the S&P 500 inched up 0.05 points or less than a tenth of a percent to 2,867.24 and the Nasdaq rose 19.78 points or 0.3 percent to 7,848.69.

The choppy trading on Wall Street reflected uncertainty about the near-term outlook for the markets on the heels of yesterday's rally.

Traders may be looking for more concrete developments out of ongoing U.S.-China trade talks before making more significant moves.

Additionally, a report from the Commerce Department partly offset the positive sentiment generated by the upbeat manufacturing data released on Monday.

The report showed a steep drop in durable goods orders in the month of February, although the decrease was largely due to a nosedive in orders for transportation equipment.

The Commerce Department said durable goods orders tumbled by 1.6 percent in February after inching up by a downwardly revised 0.1 percent in January.

Economists had expected durable goods orders to plunge by 1.8 percent compared to the 0.3 percent increase that had been reported for the previous month.

Excluding the substantial decrease in orders for transportation equipment, however, durable goods orders actually inched up by 0.1 percent in February after edging down by 0.1 percent in January.

The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending, edged down by 0.1 percent in February after climbing by 0.9 percent in January.

Paul Ashworth, Chief U.S. Economist at Capital Economics, noted shipments in the same category were unchanged, albeit after a 1.0 percent jump in January.

"Nevertheless, non-defense capital goods (ex-aircraft) shipments are on track to expand by a modest 4% annualized in the first quarter, which points to an equally modest gain in business equipment investment," Ashworth said.

He added, "The moderation in the survey evidence over the past few months, which reflects the global manufacturing downturn, indicates that underlying durable goods orders and shipments will continue to grow at a very modest pace over the next few months."

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

Biotechnology stocks showed a strong move to the upside, however, with the NYSE Arca Biotechnology Index climbing by 1 percent. With the gain, the index ended the session at a six-month closing high.

Chemical and gold stocks also saw some strength on the day, while weakness was visible among tobacco and energy stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved modestly higher on Tuesday, although Japan's Nikkei 225 Index ended the day nearly unchanged. China's Shanghai Composite Index edged up by 0.2 percent, while Australia's S&P/ASX 200 Index rose by 0.4 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1 percent, the German DAX Index advanced by 0.6 percent and the French CAC 40 Index climbed by 0.3 percent.

In the bond market, treasuries regained ground after ending the previous session notably lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.6 basis points to 2.481 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on private sector employment and service sector activity, although trading activity may remain subdued ahead of Friday's more closely watched monthly jobs report.

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