Dow, S&P 500 Give Back Ground, Nasdaq Reaches New Record Closing High

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(RTTNews) – Following the strong upward move seen last week, the major U.S. stock indexes turned in a mixed performance during trading on Tuesday. While the tech-heavy Nasdaq reached a new record closing high, the Dow and the S&P 500 gave back ground.

The Dow and the S&P 500 climbed well off their worst levels but still closed in the red. The Dow slid 208.98 points or 0.6 percent to 34,577.37 and the S&P 500 dipped 8.80 points or 0.2 percent to 4,343.54, but the Nasdaq rose 24.32 points or 0.2 percent to 14,663.64.

The pullback by the Dow and the S&P 500 was partly due to profit taking after the advance seen last Friday lifted all three major averages to new record closing highs.

Optimism about the economic outlook helped support the markets, although traders remain somewhat concerned about the outlook for monetary policy.

Further insight into the Federal Reserve’s plans may be provided later this week when the central bank releases the minutes of its latest monetary policy meeting.

Negative sentiment may also have been generated by a report from the Institute for Supply Management showing its reading on service sector activity pulled back off a record high in June.

The ISM said its services PMI slid to 60.1 in June from 64.0 in May, although a reading above 50 still indicates growth in the sector. Economists had expected the index to edge down to 63.5.

“The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month’s all-time high,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

He added, “Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”

Sector News

Energy stocks showed a substantial move to the downside on the day as the price of crude oil for August delivery tumbled $1.79 to $73.37 a barrel after reaching a six-year intraday high.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 5.6 percent and the NYSE Arca Oil Index plummeted by 3.5 percent.

Considerable weakness was also visible among steel stocks, as reflected by the 2.9 percent slump by the NYSE Arca Steel Index.

Airline, banking and natural gas stocks also saw significant weakness on the day, while retail stocks showed a strong move to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index inched up by 0.2 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slumped by 1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both slid by 0.9 percent.

In the bond market, treasuries moved sharply higher over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.1 basis points to a four-month closing low of 1.370 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the minutes of the Federal Reserve’s latest monetary policy meeting.