U.S. Stocks Close Firmly Negative Following Late-Day Pullback
Stocks turned in a lackluster performance throughout much of the trading session on Tuesday before coming under pressure going into the close. The major averages all moved to the downside, partly offsetting the strong gains posted in the previous session.
The major averages ended the day just off their lows of the session. The Dow tumbled 390.51 points or 1.6 percent to 24,206.86, the Nasdaq slid 49.72 points or 0.5 percent to 9,185.10 and the S&P 500 slumped 30.97 points or 1.1 percent to 2,922.94.
The late-day weakness on Wall Street came as traders cashed in on the rally seen on Monday, which lifted the Nasdaq and the S&P 500 to their best closing levels in over two months.
Traders have recently expressed considerable optimism about the economy reopening, although lingering concerns about the coronavirus pandemic lead to some caution.
Traders were also reacting to comments from Federal Reserve Chair Jerome Powell, who reaffirmed the central bank will provide more support to the economy.
Testifying before the Senate Banking Committee, Powell said the central bank needs to be prepared to “act further and I would say we are, if the need is there.”
“As a society, we should do everything we can to provide relief to those who are suffering for the public good,” Powell said.
On the U.S. economic front, the Commerce Department released a report showing another steep drop in new residential construction in the U.S. in the month of April.
The report said housing starts plummeted by 30.2 percent to an annual rate of 891,000 in April after tumbling by 18.6 percent to a revised 1.276 million in March.
Economists had expected housing stocks to plunge by 23.8 percent to a rate of 927,000 from the 1.216 million originally reported for the previous month.
The Commerce Department said building permits also slumped by 20.8 percent to an annual rate of 1.074 million in April after falling by 5.7 percent to a revised 1.356 million in March.
Building permits, an indicator of future housing demand, had been expected to nosedive by 26.1 percent to a rate of 1 million from the 1.353 million originally reported for the previous month.
Oil service stocks moved sharply lower over the course of the session, dragging the Philadelphia Oil Service Index down by 4.8 percent.
The weakness in the sector came despite an increase by the price of crude oil, as crude for June delivery climbed $0.68 to $32.50 a barrel.
Significant weakness was also visible among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index slumping by 3.5 percent and 2.8 percent, respectively.
Telecom, utilities and biotechnology stocks also saw notable weakness, while gold stocks moved sharply higher amid a rebound by the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Tuesday. Japan’s Nikkei 225 Index jumped by 1.5 percent, while Hong Kong’s Hang Seng Index spiked by 1.9 percent.
Meanwhile, the major European markets ended the day mixed. While the German DAX Index edged up by 0.2 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index fell by 0.8 percent and 0.9 percent, respectively.
In the bond market, treasuries regained ground after moving sharply lower in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points at 0.711 percent.
Trading on Wednesday may be impacted by reaction to the minutes of the Federal Reserve’s latest monetary policy meeting.
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