Stocks Close Mostly Lower But Still Dow Still Sets New High - U.S. Commentary

(RTTNews) - Stocks saw modest weakness during trading on Tuesday, giving back some ground after trending higher in recent sessions. While the Dow managed to end the day in positive territory, the broader Nasdaq and S&P 500 both closed in the red.

The Dow inched up 25.96 points or 0.1 percent to a new record closing high of 18,559.01, but the tech-heavy Nasdaq fell 19.41 points or 0.4 percent to 5,036.37 and the S&P 500 edged down 3.11 points or 0.1 percent to 2,163.78.

Profit taking contributed to the weakness on Wall Street, as traders cashed in on the strong upward move seen over the past few weeks.

Stocks added to their recent gains during trading on Monday, once again lifting the Dow and the S&P 500 to new record closing highs.

Selling pressure remained somewhat subdued, however, as traders seemed reluctant to make significant moves ahead of the release of quarterly results from a slew of big-name companies.

On the U.S. economic front, the Commerce Department released a report before the start of trading showing housing starts increased by much more than anticipated in the month of June.

The Commerce Department said housing starts jumped 4.8 percent to an annual rate of 1.189 million in June from the revised May estimate of 1.135 million.

Economists had expected housing starts to edge up by 0.5 percent to a rate of 1.170 million from the 1.164 million originally reported for the previous month.

Building permits, an indicator of future housing demand, also climbed by 1.5 percent to an annual rate of 1.153 million in June from a revised 1.136 million in May.

Among individual stocks, shares of Netflix (NFLX) moved sharply lower after the video streaming service reported better than expected second quarter earnings but a slump in subscriber growth.

Telecom equipment maker Ericsson (ERIC) also came under pressure after reporting weaker than expected second quarter results.

On the other hand, shares of Johnson & Johnson (JNJ) moved notably higher after the health care giant reported better than expected second quarter results and raised its full-year guidance.

Sector News

Steel stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Steel Index down by 3.5 percent. The index gave back ground after ending the previous session at its best closing level in a year.

Ryerson Holding (RYI) led the steel sector lower, tumbling by 16.2 percent after announcing it has commenced an underwritten public offering of 5 million shares of its common stock.

Considerable weakness was also visible among computer hardware stocks, as reflected by the 2.9 percent drop by the NYSE Arca Computer Hardware Index. The pullback by the index came after it ended Monday's trading at a three-month closing high.

Super Micro Computer (SMCI) posted a steep loss, plunging by 27.8 percent after the computer server and storage maker cut its fourth quarter outlook.

Oil service stocks also came under pressure on the day, moving lower along with the price of crude oil. With crude for September delivery sliding $0.49 to $45.45 a barrel, the Philadelphia Oil Service Index fell by 1.7 percent.

Biotechnology, natural gas, and telecom stocks also saw some weakness, moving lower along with most of the other major sectors.

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 surged up by 1.4 percent, while Hong Kong's Hang Seng Index fell by 0.6 percent.

Meanwhile, most European stocks moved to the downside on the day, with the French CAC 40 Index and the German DAX Index falling by 0.6 percent and 0.8 percent, respectively. However, the U.K.'s FTSE 100 Index closed just above the unchanged line.

In the bond market, treasuries saw some strength after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.558 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Wednesday is likely to be impacted by reaction to the latest earnings news.

Software giant Microsoft (MSFT) is among the companies releasing their quarterly results after the close of today's trading, while Halliburton (HAL) and Morgan Stanley (MS) are due to report before the start of trading on Wednesday.