Stocks Close Mostly Higher Following Volatile Trading Day - U.S. Commentary

(RTTNews) - Following the three-day holiday weekend, stocks fluctuated over the course of the trading session on Tuesday. The major averages bounced back and forth across the unchanged line before ending the day in positive territory.

While the major averages all closed higher, the Dow inched up only 3.66 points or less than a tenth of a percent to 17,515.23. The tech-heavy Nasdaq rose 20.46 points or 0.4 percent to 4,654.85, while the S&P 500 edged up 3.13 points or 0.2 percent to 2,022.55.

The volatility on Wall Street came as traders expressed some uncertainty ahead of European Central Bank's monetary policy announcement on Thursday.

Many analysts expect the ECB to expand its quantitative easing program, particularly after last week's surprise move by the Swiss National Bank.

Traders may also have been looking ahead to President Barack Obama's State of the Union address this evening, with the president expected to propose raising taxes on capital gains.

Early in the day, some negative sentiment was generated by a sharp pullback by the price of crude oil, as crude for March delivery tumbled $2.66 to $46.47 a barrel.

Ongoing concerns about the global economy weighed on the price of crude oil following news that the International Monetary Fund downgraded its global growth outlook.

Citing weak investment in many advanced and emerging market economies, the IMF said the global economy is expected to grow 3.5 percent this year, down from the 3.8 percent expansion projected in October. Growth in 2016 is projected to be 3.7 percent instead of 4 percent.

Meanwhile, the National Association of Home Builders released a report showing a modest drop in U.S. homebuilder confidence in the month of January.

The report said the NAHB/Wells Fargo Housing Market Index edged down to 57 in January from an upwardly revised 58 in December.

Economist had expected the housing market index to inch up to 58 from the 57 originally reported for the previous month.

Sector News

While many of the major sectors ended the day showing only modest moves, significant strength was visible among gold stocks. Reflecting the strength in the sector, the NYSE Arca Gold Bugs Index surged up by 3.4 percent to a four-month closing high.

The strength among gold stocks came amid a notable increase by the price of the precious metal, with gold February delivery climbing $17.30 to $1,294.20 an ounce.

Airline stocks also moved sharply higher on the day, driving the NYSE Arca Airline Index up by 3.1 percent. Delta (DAL) helped to lead the sector higher after reporting better than expected fourth quarter earnings.

Biotechnology, telecom, and computer hardware stocks also turned in strong performances, while weakness was visible among housing and natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index surged up by 2.1 percent, while Hong Kong's Hang Seng Index advanced by 0.9 percent.

The major European markets also saw some strength on the day. While the French CAC 40 Index jumped by 1.2 percent, the U.K.'s FTSE 100 Index rose by 0.5 percent and the German DAX Index inched up by 0.1 percent.

In the bond market, treasuries ended the day near the unchanged line after failing to sustain an early upward move. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.807 percent.

Looking Ahead

Wednesday's trading could be impacted by reaction to earnings news from IBM (IBM), Advanced Micro Devices (AMD), and Netflix (NFLX), which are among the companies releasing their quarterly results after the close of today's trading. A report on U.S. housing starts may also attract some attention on Wednesday, although activity may be somewhat subdued as the ECB announcement looms.