Nasdaq, S&P 500 Add To Yesterday's Gains But Dow Gives Back Ground

(RTTNews) - Stocks fluctuated over the course of the trading session on Tuesday but managed to end the day mostly higher. The Nasdaq and the S&P 500 added to the strong gains posted during Monday's session, although the narrower Dow bucked the uptrend.

The Nasdaq and the S&P 500 saw further going into the close, reaching new highs for the session. The Nasdaq climbed 141.28 points or 0.8 percent to 17,025.88 and the S&P 500 rose 24.47 points or 0.5 percent to 5,495.52, but the Dow dipped 92.63 points or 0.2 percent to 40,736.96.

The volatility seen over the course of the trading day came as traders looked ahead to the release of closely watched inflation data in the coming days.

The Labor Department is scheduled to release reports on consumer and producer price inflation in the month of August on Wednesday and Thursday, respectively.

The reports are expected to show slowdowns by the rates of consumer and producer price growth compared to the same month a year ago.

The data could impact the outlook for interest rates ahead of the Federal Reserve's monetary policy meeting next week.

The Fed is almost universally expected to begin lowering interest rates next week, but there is some debate about the size of the rate cut.

CME Group's FedWatch Tool is currently indicating a 69 percent chance the Fed will lower rates by 25 basis points and a 31 percent chance of a 50 basis point rate cut.

Sector News

Software stocks turned in a strong performance on the day, resulting in a 1.9 percent jump by the Dow Jones U.S. Software Index.

Oracle (ORCL) led the sector higher, soaring by 11.4 percent after reporting better than expected fiscal first quarter results and announcing a strategic partnership with Amazon Web Services.

Considerable strength also emerged among networking stocks, as reflected by the 1.9 percent surge by the NYSE Arca Networking Index.

Gold, commercial real and semiconductor stocks also moved notably higher over the course of the session, while a steep drop by the price of crude oil weighed on energy stocks.

Banking stocks also showed a significant move to the downside on the day, dragging the KBW Bank Index down by 1.8 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index dipped by 0.2 percent, while China's Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slumped by 1.0 percent, the U.K.'s FTSE 100 Index slid by 0.8 percent and the French CAC 40 Index slipped by 0.2 percent.

In the bond market, treasuries extended the upward trend seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.1 basis points to 3.646 percent.

Looking Ahead

Trading on Wednesday is likely to be driven by reaction to the report on consumer price inflation and its impact on the outlook for interest rates.