Stocks Close Mostly Higher As Fed Announcement Looms - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Tuesday after initially showing a lack of direction. The strength that emerged on the day partly offset the notable losses posted in the two previous sessions.

The major averages finished the session firmly in positive territory. The Dow climbed 113.31 points or 0.6 percent to 17,904.48, the Nasdaq rose 25.58 points or 0.5 percent to 5,055.55 and the S&P 500 advanced 11.86 points or 0.6 percent to 2,096.29.

Bargain hunting contributed to the upward move on Wall Street, as traders picked up stocks at somewhat reduced levels following the pullback seen Friday and Monday.

The Dow fell to its lowest intraday level in over two months in early trading on Monday before regaining some ground over the course of the session.

A continued move to the upside by treasuries may also have generated some positive sentiment, with the strength pulling bond yields down further off their recent highs.

Nonetheless, traders still seemed somewhat reluctant to make any significant moves ahead of the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

The Fed is not expected to announce an increase in interest rates due to some recent signs of economic sluggishness, but traders will be paying close attention to any hints regarding the timing of the first rate hike.

The monetary policy statement will be accompanied by a press conference by Fed Chair Janet Yellen as well as the central bank's latest forecasts.

On the U.S. economic front, the Commerce Department released a report before the start of trading showing a bigger than expected pullback in housing starts in the month of May.

The Commerce Department said housing starts tumbled 11.1 percent to an annual rate of 1.036 million in May after jumping 22.1 percent to a seven-year high of 1.165 million in April. Economists had expected starts to drop to an annual rate of 1.090 million.

Meanwhile, the report also said building permits, an indicator of future housing demand, jumped 11.8 percent to an annual rate of 1.275 million in May from the revised April rate of 1.140 million.

The increase in building permits came as a surprise to economists, who had expected permits to drop to a rate of 1.105 million.

Sector News

While many of the major sectors ended the day showing only modest moves, considerable strength was visible among software stocks. Reflecting the strength in the software sector, the Dow Jones Software Index advanced by 1.1 percent.

Adobe Systems (ADBE) turned in one of the software sector's best performances ahead of the release of its second quarter results after the close of today's trading.

Tobacco stocks also saw significant strength on the day, driving the NYSE Arca Tobacco Index up by 1.3 percent. British American Tobacco (BTI) posted a standout gain after Credit Suisse reinitiated coverage of the stock with an Outperform rating.

Notable strength also emerged among natural gas stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Natural Gas Index. With the gain, the index rebounded after ending the previous session at its lowest closing level in well over a month.

On the other hand, gold stocks came under pressure on the day, dragging the NYSE Arca Gold Bugs Index down by 1.5 percent to a nearly six-month closing low. The weakness in the sector came as gold for August delivery fell $4.90 to $1,180.90 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region once again moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slumped by 0.6 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.

Meanwhile, European stocks moved mostly higher over the course of the session. The French CAC 40 Index and the German DAX Index both rose by 0.5 percent, although the U.K.'s FTSE 100 Index closed nearly unchanged.

In the bond market, treasuries moved moderately higher, extending their recent recovery. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 4 basis points to 2.318 percent.

Looking Ahead

The Fed statement will be the primary focus on Wednesday, although traders may also keep an eye on the latest news out of Greece.