Nasdaq Posts Another Strong Gain But Dow Closes Nearly Unchanged

Stocks moved mostly higher during trading on Tuesday, although the Dow gave back early gains to end the session nearly unchanged. The broader Nasdaq and S&P 500 both closed firmly in positive territory.

The tech-heavy Nasdaq jumped 133.67 points or 1.2 percent to 11,190.32 and the S&P 500 climbed 17.66 points or 0.5 percent to 3,401.20, while the Dow inched up just 2.27 points or less than a tenth of a percent to 27,995.60 after rising by nearly 240 points in early trading.

A continued rebound by technology stocks contributed to higher close on Wall Street, with big-name companies like Tesla (TSLA), Netflix (NFLX), Oracle (ORCL) and Facebook (FB) posting standout gains.

The tech sector extended yesterday’s rebound after seeing considerable weakness last week, although the Nasdaq remains well off its recent record highs.

Meanwhile, shares of Apple (AAPL) pulled back well off their early highs, edging up by just 0.2 percent after jumping by as much as 3 percent.

The pullback by Apple weighed on the Dow along with notable weakness among shares of Caterpillar (CAT), JPMorgan Chase (JPM) and Travelers (TRV).

Nonetheless, overall trading activity appeared somewhat subdued ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but traders are likely to pay close attention to any tweaks to the accompanying statement. The central bank’s latest economic projections may also attract attention.

Meanwhile, traders largely shrugged off a report from the Fed showing growth in U.S. industrial production slowed by much more than expected in the month of August.

The Fed said industrial production climbed by 0.4 percent in August after soaring by an upwardly revised 3.5 percent in July.

Economists had expected production to jump by 1.0 percent compared to the 3.0 percent spike originally reported for the previous month.

Production increased for the fourth consecutive month but remains 7.3 percent below its pre-pandemic February level.

“We are vigilant that future progress toward a full recovery in the industrial sector will be slow and uneven as a health solution remains out of reach and fiscal relief fades,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

“While the travails are comparatively less severe than in certain services sectors, industrial production risks remain heavily tilted to the downside,” he added.

A separate report from the Labor Department showed another notable increase in U.S. import prices in the month of August, with prices jumping by much more than expected.

Sector News

Software stocks showed a strong move to the upside on the day, driving the Dow Jones U.S. Software Index up by 1.8 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.7 percent gain posted by the Philadelphia Semiconductor Index.

Retail, steel and commercial real estate stocks also saw notable strength, contributing to the higher close by the broader markets.

On the other hand, financial stocks came under pressure on the day, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index falling by 2.1 percent and 1.4 percent, respectively.

Considerable weakness also emerged among housing stocks, resulting in a 1.2 percent drop by the Philadelphia Housing Sector Index.

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 fell by 0.4 percent, while China’s Shanghai Composite Index rose by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index surged up by 1.3 percent, the French CAC 40 Index and the German DAX Index rose by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries closed nearly unchanged for the second straight session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 0.679 percent.

Looking Ahead

The Fed decision is likely to be in the spotlight on Wednesday, although reports on retail sales, business inventories and homebuilder may attract some attention ahead of the central bank’s announcement.

On the earnings front, FedEx (FDX) and Adobe (ADBE) are scheduled to release their quarterly results after the close of today’s trading.

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