Stocks Close Mostly Lower After Initial Move To The Downside - U.S. Commentary

(RTTNews) - Stocks moved sharply lower at the start of trading on Tuesday and maintained a negative bias throughout much of the trading session. The drop on the day extended the pullback seen in the previous session.

While the Dow and the S&P 500 closed firmly in negative territory, the tech-heavy Nasdaq edged down just 3.57 points or 0.1 percent to 5,098.24. The Dow fell 162.51 points or 0.9 percent to 17,568.00, and the S&P 500 slid 13.48 points or 0.7 percent to 2,063.59.

The initial weakness on Wall Street came as commodities prices extended their recent decline, with the price of crude oil falling to its lowest levels in well over six years.

Crude oil for January delivery climbed well off its worst levels of the day but still ended the day down by $0.14 at $37.51 a barrel.

Worries about global oversupply have recently weighed on the price of crude oil, as OPEC ended its policy meeting on Monday without announcing a reduction in production.

Disappointing Chinese trade data also generated some negative sentiment, with a report from the National Bureau of Statistics showing that the Chinese trade surplus unexpectedly fell in November.

The trade surplus came in at $54.1 billion compared to $61.6 billion in October and the consensus estimate of $63.5 billion.

Exports fell for the fifth straight month, dropping a worse than expected 6.8 percent from a year ago, while imports fell 8.7 percent year-over-year.

Traders were also looking ahead to the Federal Reserve's highly anticipated monetary policy meeting scheduled for next week.

The Fed is widely expected to announce an increase in interest rates following the meeting, but traders are likely to pay close attention to the wording of the statement.

Fed officials have repeatedly indicated they expect the pace of monetary policy normalization to be gradual due to lingering concerns about the momentum of the U.S. economy.

The economic calendar remained quiet on the day, although reports on producer prices and retail sales are likely to attract attention later in the week.

Sector News

Reflecting concerns about the outlook for global demand, steel stocks saw substantial weakness on the day. The NYSE Arca Steel Index plunged by 3.4 percent to its lowest closing level in seven years.

Mechel (MTL) and Rio Tinto (RIO) turned in two of the steel sector's worst performances, tumbling by 9.8 percent and 8.1 percent, respectively.

Significant weakness was also visible among telecom stocks, as reflected by the 3.2 percent loss posted by the NYSE Arca Telecom Index. Qualcomm (QCOM) led the sector lower after the European Union launched an anti-trust action against the company.

Transportation stocks also saw considerable weakness on the day, resulting in a 2.8 percent drop by the Dow Jones Transportation Average. With the loss, the index fell to a three-month closing low.

Chemical, banking, housing, and gold stocks also moved notably lower, while biotechnology stocks showed a strong move to the upside.

Other markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Tuesday. Japan's Nikkei 225 Index slumped by 1 percent, while Hong Kong's Hang Seng Index tumbled by 1.3 percent.

The major European markets also saw considerable weakness on the day. While the U.K.'s FTSE 100 Index dropped by 1.4 percent, the French CAC 40 Index plunged by 1.6 percent and the German DAX Index plummeted by 2 percent.

In the bond market, treasuries showed a lack of direction for much of the session before closing modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 2.239 percent.

Looking Ahead

The Commerce Department is scheduled to release its report on wholesale inventories in the month of October on Wednesday, although the data does not typically move the markets.