Markets

U.S. Stocks Showing A Lack Of Direction Following Recent Strength

(RTTNews) - After trending higher over the past few sessions, stocks have shown a lack of direction over the course of morning trading on Tuesday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 8.58 points or 0.8 percent at 11,388.30, the Dow is down 148.63 points or 0.5 percent at 28,159.83 and the S&P 500 is down 3.99 points or 0.1 percent at 3,427.29.

The lackluster performance on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following the recent run by the Nasdaq and S&P 500 to record highs.

Traders may also be looking ahead to Federal Reserve Chair Jerome Powell's highly anticipated speech at the Jackson Hole symposium on Thursday.

A mixed batch of U.S. economic data may also be contributing to the choppy trading, with separate reports showing a much bigger than expected spike in new home sales and an unexpected deterioration in consumer confidence.

The Commerce Department released a report showing new home sales spiked by 13.9 percent to an annual rate of 901,000 in July after soaring by 15.1 percent to a rate of 791,000 in June.

Economists had expected new home sales to climb by 1.2 percent to a rate of 785,000 from the 776,000 originally reported for the previous month.

The much bigger than expected jump lifted new home sales to their highest annual rate since reaching 998,000 in December of 2006.

Meanwhile, a separate report from the Conference Board showed its consumer confidence index slumped to 84.8 in August after tumbling to a downwardly revised 91.7 in July.

The continued decrease came as a surprise to economists, who had expected the index to inch up to 93.0 from the 92.6 originally reported for the previous month.

Meanwhile, Dow components Exxon Mobil (XOM), Raytheon (RTX) and Pfizer (PFE) are moving notably lower following news they are being removed from the blue chip index.

The three stocks will be replaced by Salesforce.com (CRM), Honeywell (HON), and Amgen (AMGN), which are posting strong gains on the day.

The changes to the Dow components come as Apple's (APPL) upcoming 4-for-1 stock split will reduce the index's weight in the information technology sector.

Most of the major sectors are showing only modest moves in mid-day trading, contributing to the lackluster performance by the broader markets.

Gold stocks have shown a notable move to the downside, however, with the NYSE Arca Gold Bugs Index falling by 1.4 percent.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, as gold for December delivery is slumping $15.60 to $1,923.60 an ounce.

Airline, steel and oil stocks are also seeing notable weakness, giving back ground following the strong upward move seen in the previous session.

In overseas trading, stocks markets across the Asia-Pacific region moved mostly higher on Tuesday, although China's Shanghai Composite Index bucked the uptrend and fell by 0.4 percent. Japan's Nikkei 225 Index surged up by 1.4 percent, while South Korea's Kospi spiked by 1.6 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index has fallen by 0.8 percent, the French CAC 40 Index is up by 0.4 percent and the German DAX Index is up by 0.3 percent.

In the bond market, treasuries have moved notably lower after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.4 basis points at 0.710 percent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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