Stocks Showing A Lack Of Direction In Morning Trading – U.S. Commentary
After trending higher over the past few sessions, stocks are showing a lack of direction in morning trading on Tuesday. The choppy trading comes after the major averages closed higher for three straight sessions, largely offsetting the sell-off seen last Wednesday.
Currently, the major averages are turning in a mixed performance on the day. While the Nasdaq is down 7.34 points or 0.1 percent at 6,126.28, the Dow is up 24.34 points or 0.1 percent at 20,919.17 and the S&P 500 is up 2.08 points or 0.1 percent at 2,396.10.
The lackluster performance on Wall Street comes as traders seem reluctant to make any significant moves ahead of tomorrow’s release of the minutes of the latest Federal Reserve meeting.
The Fed is widely expected to raise interest rates next month, with CME Group’s FedWatch tool indicating a 78.5 percent chance of a quarter point rate hike.
Traders have largely shrugged off a report from the Commerce Department showing a substantial pullback in new home sales in the month of April.
The Commerce Department said new home sales plunged by 11.4 percent to an annual rate of 569,000 in April from an upwardly revised 642,000 in March.
Economists had expected new home sales to drop to a rate of 602,000 from the 621,000 originally reported for the previous month.
The upwardly revised figure for March reflected the highest rate of new home sales since it reached 727,000 in October of 2007.
Most of the major sectors are showing only modest moves in morning trading, contributing to the lack of direction by the broader markets.
While semiconductor, gold, and computer hardware stocks are seeing some weakness on the day, strength is visible among tobacco and utilities stocks.
Among individual stocks, shares of Sonus Networks have moved sharply higher after the company announced a merger with GENBAND in a transaction valuing the combined company at approximately $745 million.
Medical equipment and technology company Agilent is also seeing significant strength after reporting better than expected fiscal second quarter results and raising its full-year guidance.
On the other hand, shares of Auto Zone (AZO) have come under pressure after the auto parts retailer reported weaker than expected fiscal third quarter results.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index fell by 0.3 percent, while China’s Shanghai Composite Index dropped by 0.5 percent.
Meanwhile, the major European markets have moved to the upside on the day. While the French CAC 40 Index has risen by 0.5 percent, the German DAX Index and the U.K.’s FTSE 100 Index are up by 0.3 percent and 0.2 percent, respectively.
In the bond market, treasuries have moved modestly higher after ending the previous session slightly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.1 basis points at 2.243 percent.