Stocks Close Modestly Lower As Fed Announcement Looms - U.S. Commentary

(RTTNews) - After ending the previous session roughly flat, stocks moved modestly lower over the course of the trading day on Tuesday. Selling pressure remained relatively subdued, however, limiting the downside for the broader markets.

The major averages ended the day in negative territory but off their lows for the session. The Dow slipped 41.62 points or 0.2 percent to 17,581.43, the Nasdaq edged down 4.56 points or 0.1 percent to 5,030.15 and the S&P 500 dipped 5.29 points or 0.3 percent to 2,065.89. The modest weakness on Wall Street came as traders cashed in on some of the recent strength in the markets ahead of the Federal Reserve's highly anticipated monetary policy announcement due Wednesday afternoon.

The Fed is widely expected to hold off on raising interest rates, but traders will be paying close attention to any signals regarding a rate hike in December.

Negative sentiment may also have been generated by some disappointing economic news, including a report from the Commerce Department showing a continued decrease in durable goods orders in the month of September.

The report said durable goods orders slid by 1.2 percent in September following a revised 3.0 percent decrease in August.

Excluding a continued decrease in orders for transportation equipment, durable goods orders fell by a more modest 0.4 percent in September after declining by 0.9 percent in August.

A separate report from the Conference Board also showed a sharp pullback in U.S. consumer confidence in the month of October.

The Conference Board said its consumer confidence index tumbled to 97.6 in October from a downwardly revised 102.6 in September.

On the earnings front, chemical giant DuPont (DD) reported third quarter earnings that came in above analyst estimates but on weaker than expected revenues. CEO Nick Fanandakis said the company is "not pleased" with its results.

Drug giants Merck (MRK) and Pfizer (PFE) also reported better than expected third quarter earnings and provided upbeat full-year guidance.

Meanwhile, Ford (F) reported third quarter earnings that came in slightly below analyst estimates even thought the auto giant reported better than expected sales.

Sector News

Transportation stocks saw substantial weakness throughout the session, resulting in a 2.6 percent drop by the Dow Jones Transportation Average. With the loss, the average pulled back further off the two-month closing high set last Friday.

Railroad companies Union Pacific (UNP) and Kansas City Southern (KSU) turned in two of the transportation sector's worst performances.

Significant weakness was also visible among computer hardware stocks, as reflected by the 2.4 percent loss posted by the NYSE Arca Computer Hardware Index. Lexmark (LXK) led the hardware sector lower after reporting a third quarter loss.

Energy stocks also came under pressure on the day, moving lower along with the price of crude oil. Crude for December slid $0.78 to a two-month closing low of $43.20 a barrel.

On the other hand, biotechnology stocks moved sharply, driving the NYSE Arca Biotechnology Index up by 3.5 percent. Agios Pharmaceuticals (AGIO) posted a standout gain, surging up by 24.8 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Tuesday. Japan's Nikkei 225 Index slid by 0.9 percent, while Hong Kong's Hang Seng Index and China's Shanghai Composite Index both inched up by 0.1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.8 percent, the German DAX Index and the French CAC 40 Index both slumped by 1 percent.

In the bond market, treasuries extended the upward move seen in the previous session as traders waited on the Fed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 2.028 percent.

Looking Ahead

The Fed will take center stage on Wednesday, with the central bank's announcement at 2 pm ET likely overshadowing an earlier report on international trade.

Nonetheless, early trading could still be impacted by reaction to earnings news from Apple (AAPL), as the tech giant is releasing its fiscal fourth quarter results after the close of today's trading.