Stocks Pull Back Off But Levels But Still Close Mostly Higher - U.S. Commentary

(RTTNews) - Stocks managed to end Tuesday's trading mostly higher but were well off their best levels of the day. Lingering concerns about the situation in Syria and the outlook for the Federal Reserve's stimulus program limited the upside for the markets.

The major averages all ended the day in positive territory, partly offsetting the losses posted last week. The Dow edged up 23.65 points or 0.2 percent to 14,833.96, the Nasdaq climbed 22.74 points or 0.6 percent to 3,612.61 and the S&P 500 rose 6.80 points or 0.4 percent to 1,639.77.

Early strength was seen on Wall Street amid easing concerns about an imminent U.S. attack on Syria following President Barack Obama's decision to seek congressional approval before taking any military action.

With Congress still on recess until next Monday, the administration is expected to use the next week to try and rally support for the use of military force against Syria, which has drawn opposition from both sides of the aisle.

However, selling pressure was generated by remarks from House Speaker John Boehner, R-Ohio, who expressed support for Obama's call for military action and urged his colleagues to do the same.

Traders also showed a mixed reaction to some better than expected U.S. economic data, including a report from the Institute for Supply Management showing an unexpected increase by its index of manufacturing activity.

The ISM said its purchasing managers index edged up to 55.7 in August from 55.4 in July, with a reading above 50 indicating an increase in manufacturing activity. The modest increase came as a surprise to economists, who had expected the index to dip to a reading of 53.8.

While the report points to a positive outlook for the U.S. economy, it also provides the Federal Reserve with further evidence that it can begin scaling back its asset purchase at its next meeting later this month.

A separate report from the Commerce Department showed a bigger than expected increase in construction spending in the month of July.

In corporate news, shares of Nokia (NOK) surged up by 31.3 percent after the mobile communications company announced an agreement to sell substantially all of its Devices & Services business and license its patents to Microsoft (MSFT) for 5.44 billion euros in cash

Nokia said it expects to book a gain on the sale of approximately 3.2 billion euros and expects the transaction to be significantly accretive to earnings.

Sector News

While many of the major sectors ended the day well off their best levels of the day, significant strength remained visible among steel stocks. The NYSE Arca Steel Index surged up by 2.3 percent after ending the previous session at its worst closing level in almost a month.

The strength among steel stocks reflected optimism about the outlook for steel demand on the heels of upbeat global manufacturing data.

Networking stocks also held on to strong gains, with the NYSE Arca Networking Index rising by 2.1 percent. Alcatel-Lucent (ALU) and Infinera (INFN) turned in two of the sector's best performances.

Considerable strength also emerged among biotechnology stocks, as reflected by the 2.1 percent gain posted by the NYSE Arca Biotechnology Index. Regeneron (REGN) and Biogen Idec (BIIB) posted notable gains.

Airline, computer hardware, and health insurance stocks also turned in strong performances, moving higher along with most of the other major sectors.

Meanwhile, utilities stocks came under pressure over the course of the session, dragging the Dow Jones Utilities Average down by 1 percent.

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 3 percent, while Hong Kong's Hong Seng Index advanced by 1 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.6 percent, the French CAC 40 Index and the German DAX Index both ended the day down by 0.8 percent.

In the bond market, treasuries ended the day sharply lower but well off their worst levels of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.9 basis points to 2.848 percent.

Looking Ahead

Trading on Wednesday may be impacted by the release of the Commerce Department's report on the U.S. trade balance as well as the Fed's Beige Book.