Stocks Close Modestly Higher After Seeing Initial Weakness - U.S. Commentary

(RTTNews) - After recovering from an early move to the downside, stocks showed a lack of direction throughout much of the trading day on Tuesday before closing modestly higher. The slim gains on the day lifted the S&P 500 to another new record closing high.

The major averages all ended the day slightly above the unchanged line. The Dow edged up 28.26 points or 0.2 percent to 18,047.58, the Nasdaq inched up 5.43 points or 0.1 percent to 4,899.27 and the S&P 500 ticked up 3.35 points or 0.2 percent to 2,100.34.

The modest strength seen at the close of trading was partly due to expectations that Greece will eventually reach an agreement with its eurozone creditors even though talks broke down on Monday.

Adding to the optimism were media reports indicating that the new Greek government plans to apply for an extension to its current loan agreement.

Distinguishing the loan agreement from the full bailout program, the reports said Greece will ask for an extension of up to six months on Wednesday.

While Greece is staunchly opposed to an extension of the current bailout program, Prime Minister Alexis Tsipras highlighted the difference between the bailout accord and the loan agreement in a speech to parliament.

Meanwhile, traders largely shrugged off a batch of disappointing U.S. economic data, including a report from the National Association of Home Builders showing an unexpected deterioration in homebuilder confidence.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 55 in February after dipping to 57 in January. The decrease came as a surprise to economists, who had expected the index to inch up to a reading of 58.

A separate report from the New York Federal Reserve showed a bigger than expected decrease by its index of regional manufacturing activity.

The New York Fed said its headline general business conditions index dipped to 7.8 in February from 10.0 in January.

While a positive reading indicates a continued increase in regional manufacturing activity, economists had expected the index to edge down to 9.5.

Sector News

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

Oil service stocks showed a substantial move to the upside, however, with the Philadelphia Oil Service Index surging up by 2.1 percent. With the gain, the index reached its best closing level in well over a month.

The strength among oil service stocks came amid an increase by the price of crude oil, with crude for March delivery climbing $0.75 to $53.53 a barrel.

Meanwhile, gold stocks saw considerable weakness throughout the session, dragging the NYSE Arca Gold Bugs Index down by 3.3 percent. The losses by gold stocks came as the price of gold for April delivery tumbled $18.50 to $1,208.60 an ounce.

Notable weakness also emerged among airline stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Airline Index.

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 edged down by 0.1 percent, while Hong Kong's Hang Seng Index crept up by 0.2 percent.

The major European markets also ended the day mixed. While the German DAX Index fell by 0.3 percent, the U.K.'s FTSE 100 Index advanced by 0.6 percent and the French CAC 40 Index closed just above the unchanged.

In the bond market, treasuries moved sharply lower, extending the downtrend seen for much of the month of February. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 12.4 basis points to 2.145 percent.

Looking Ahead

While developments in Greece are likely to remain in focus on Wednesday, trading could also be impacted by the release of reports on U.S. housing starts, producer prices, and industrial production.

Traders are also likely to keep an eye on the minutes of the latest Federal Reserve meeting, which could shed some light on the outlook for interest rates.