News Column

Stocks Moving Modestly Lower Following Recent Strength - US Commentary

June 10, 2014

WASHINGTON (Alliance News) - Stocks have moved modestly lower in early trading on Tuesday, giving back some ground after trending higher in recent sessions. The major averages have all slid into negative territory, although selling pressure has remained somewhat subdued.

In recent trading, the major averages have bounced off their lows for the young session, but they remain in the red. The Dow is down 34.80 points or 0.2% at 16,908.30, the Nasdaq is down 10.56 points or 0.2% at 4,325.68 and the S&P 500 is down 4.63 points or 0.2% at 1,946.64.

The early weakness on Wall Street is partly due to profit taking, with some traders cashing in on the recent upward trend by the markets.

The Dow and the S&P 500 are pulling back off the record closing highs set on Monday, while the Nasdaq is moving lower after ending the previous session at its best levels in three months.

Nonetheless, traders seem somewhat reluctant to make any significant moves amid another quiet day on the US economic front.

The Commerce Department recently released a report showing a much bigger than expected increase in wholesale inventories in April, but the data has largely been shrugged off by the markets.

The report said wholesale inventories surged up by 1.1% in April, matching the increase seen in the previous month. Economists had expected inventories to increase by about 0.5%.

News out of China has also helped to limit the downside for the markets, as the Bank of China lowered the reserve requirement for banks advancing loans to the rural sector and small businesses by 50 basis points.

Peter Boockvar, managing director at the Lindsey Group, said, "This move follows other fiscal steps over the past month that has helped the rail industry, some easing of housing restrictions and tax incentives for small business."

"China is doing their best to balance the need to controllably deflate its property bubble without taking down the whole economy," he added.

Airline stocks are seeing notable weakness, however, with the NYSE Arca Airline Index falling by 1.2%. With the loss, the index is pulling back further off the twelve-year closing high that it set last Friday.

Brokerage, electronic storage, and steel stocks are also seeing early weakness, while most of the other major sectors have shown more modest moves to the downside.

Among individual stocks, shares of RadioShack (RSH) have come under pressure in early trading after the electronics retailer reported a much wider than expected first quarter loss.

Biotech company Dendreon (DNDN) is also moving notably lower after announcing that John Johnson plans to step down as president and CEO for personal reasons.

On the other hand, shares of Chico's FAS (CHS) have moved sharply higher after the Financial Times reported that the women's apparel retailer is considering selling itself to private equity firms.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan'sNikkei 225 Index fell by 0.9%, while Hong Kong'sHang Seng Index advanced by 0.9%.

Meanwhile, the major European markets have moved modestly lower on the day. While the German DAX Index is just below the unchanged line, the French CAC 40 Index and the UK'sFTSE 100 Index are down by 0.1% and 0.2%, respectively.

In the bond market, treasuries are extending a recent downward trend with a moderate move to the downside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.3 basis points at 2.646%.

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Source: Alliance News

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