U.S. Stocks Pull Back Into The Red After Seeing Initial Strength

(RTTNews) - After failing to sustain an early move to the downside, stocks moved mostly lower over the course of the trading session on Tuesday. The major averages pulled back well off their highs of the session and into negative territory.

The major averages ended the day in the red but off their lows of the session. The Dow slid 120.93 points or 0.5 percent to 25,777.90, the Nasdaq fell 26.79 points or 0.3 percent to 7,826.95 and the S&P 500 dropped 9.22 points or 0.3 percent to 2,869.16.

The early strength on Wall Street came as traders continued to pick up stocks at relatively reduced levels following the sell-off seen last Friday.

Buying interest waned shortly after the start of trading, however, as traders expressed uncertainty about the escalating U.S.-China trade war.

President Donald Trump has claimed top Chinese officials called asking for the resumption of trade talks, but Chinese Foreign Ministry spokesman Geng Shuang continues to say he has not heard of any recent call.

Geng told reporters at a press briefing on Tuesday that China hopes the U.S. will return to rationality, stop its wrong practices and create conditions for the two sides to resume talks on the basis of mutual respect.

The yield curve between the ten-year and two-year yields inverting to its worst level since 2007 also led to renewed concerns about a looming recession.

Meanwhile, traders largely shrugged off a report from the Conference Board showing only a slight deterioration in U.S. consumer confidence in the month of August.

The Conference Board said its consumer confidence index edged down to 135.1 in August after surging up to 135.8 in July. Economists had expected the index to show a much more substantial decrease to 130.0.

"Consumer confidence was relatively unchanged in August, following July's increase," said Lynn Franco, Senior Director of Economic Indicators at the Conference Board. "While other parts of the economy may show some weakening, consumers have remained confident and willing to spend."

She added, "However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers' optimism regarding the short-term economic outlook."

Sector News

Tobacco stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 4.7 percent to its lowest closing level in over six months.

Philip Morris (PM) and Altria Group (MO) posted steep losses after the companies confirmed they are in discussions about reuniting in a potential all-stock, merger of equals.

Significant weakness also emerged among biotechnology stocks, with the NYSE Arca Biotechnology Index falling by 1.3 percent to a seven-month closing low.

Natural gas, steel, and transportation stocks also saw considerable weakness, while gold stocks bucked the downtrend amid a notable increase by the price of the precious metal.

With gold for December delivery jumping $14.60 to $1,551.80 an ounce, the NYSE Arca Gold Bugs Index surged up by 3.8 percent to its best closing level in almost three years.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index shot up by 1 percent, while China's Shanghai Composite Index jumped by 1.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index climbed by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries moved notably higher following the modest pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.5 basis points to a three-year closing low of 1.490 percent.

Looking Ahead

A lack of major U.S. economic data is likely to keep traders on the lookout for any news on the trade front on Wednesday.