Stocks Turn In Lackluster Performance After Yesterday's Rally - U.S. Commentary

(RTTNews) - After moving sharply higher over the course of the previous session, stocks showed a lack of direction throughout the trading day on Tuesday. Despite the lackluster performance, the Dow and the S&P 500 still ended the session at new record closing highs.

The major averages turned in a mixed performance on the day. While the tech-heavy Nasdaq dipped 13.69 points or 0.3 percent to 4,130.17, the Dow edged up 19.97 point or 0.1 percent to 16,715.44 and the S&P 500 crept up 0.80 point or less than a tenth of a percent to 1,897.45.

The choppy trading on Wall Street came as traders expressed some uncertainty about the near-term outlook for the markets following yesterday's rally.

Traders were also digesting a report from the Commerce Department showing weaker than expected retail sales growth in the month of April.

The report said retail sales edged up by 0.1 percent in April after surging up by an upwardly revised 1.5 percent in March.

Economists had expected sales to rise by about 0.4 percent compared to the 1.1 percent growth originally reported for the previous month.

Peter Boockvar, managing director at the Lindsey Group, said, "While sales in April were weaker than expected, the March upward revision helped to cushion most of the drop specifically at the 'control group,' which gets plugged into GDP."

"The March upward revision will help Q1 GDP estimates but will be more than offset by a reduction to Q2," Boockvar added.

Traders largely shrugged off separate reports showing an unexpected drop in import prices in April and an increase in business inventories in March.

Among individual stocks, shares of Rackspace (RAX) moved sharply higher on the day after the web-hosting company reported better than expected first quarter results.

Coffee maker Keurig Green Mountain (GMCR) also turned in a strong performance after Coca-Cola (KO) exercised its option to increase its stake in the company to 16 percent from 10 percent.

On the other hand, shares of Elizabeth Arden (RDEN) fell sharply after the cosmetics maker reported an unexpected first quarter loss.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Tobacco stocks came under considerable selling pressure, however, with the NYSE Arca Tobacco Index falling by 1.9 percent. The pullback by the index came after it ended the previous session at a two-month closing high.

Cigarette maker Vector Group (VGR) helped lead the tobacco sector lower, falling by 5.8 percent despite reporting a first quarter profit compared to a year-ago loss.

Biotechnology, brokerage, and semiconductor stocks also moved to the downside on the day, while strength was visible among electronic storage and railroad 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 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

The major European markets also saw strength on the day. While the German DAX Index advanced by 0.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both closed up by 0.3 percent.

In the bond market, treasuries showed a notable move to the upside on the heels of the retail sales data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.8 basis points to 2.618 percent.

Looking Ahead

Another batch of economic data is scheduled to be released on Wednesday, with traders likely to keep an eye on reports on producer prices and homebuilder confidence.