U.S. Stocks Turning In Another Lackluster Performance

With traders digesting a slew of earnings and economic news, 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 on opposites sides of the unchanged line. While the Dow is up 31.76 points or 0.1 percent at 27,390.92, the Nasdaq is down 1.73 points or less than 0.1 percent at 8,256.45 and the S&P 500 is down 0.63 points or less than 0.1 percent at 3,013.67.

The choppy trading on Wall Street comes as a mixed batch of U.S. economic data has led to uncertainty about the near-term outlook for interest rates.

Raising concerns the Federal Reserve could refrain from cutting rates later this month, the Commerce Department released a report showing much stronger than expected U.S. retail sales growth.

The Commerce Department said retail sales rose by 0.4 percent in June, matching the downwardly revised increase in May. Economists had expected retail sales to inch up by 0.1 percent.

Closely watched core retail sales, which exclude autos, gasoline, building materials and food services, jumped by 0.7 percent in June after climbing by an upwardly revised 0.6 percent in May.

ING Chief International Economist James Knightley said the report suggests consumer spending rose robustly in the second quarter, which he expects to help keep GDP growth above 2 percent.

“Despite this, financial markets continue to price in four 25 basis point interest rate cuts from the Federal Reserve over the next 18 months,” Knightley said.

He added, “Yet, in an environment where growth is solid, core inflation is close to target, unemployment is near 50-year lows and stock markets are at all-time highs, there seems little justification for anything more than precautionary rate cuts.”

Meanwhile, a separate report from the Fed showed U.S. industrial production was unexpectedly flat June, as a steep drop in utilities output offset increases in manufacturing and mining output.

The Fed said industrial production was unchanged in June after climbing by 0.4 percent in May. Economists had expected production to edge up by 0.2 percent.

The modest gain by the Dow is partly due to a notable advance by shares of Goldman Sachs (GS), which have moved higher after the financial giant reported better than expected second quarter results.

On the other hand, shares of Johnson & Johnson (JNJ) have moved to the downside even though the healthcare giant beat second quarter expectations and raised its full-year guidance.

Most of the major sectors are showing only modest moves on the day, although transportation stocks have shown a substantial move to the upside.

Reflecting the strength in the transportation sector, the Dow Jones Transportation Average has surged up by 2.4 percent to its best intraday level in over two months.

J.B. Hunt Transport Services (JBHT) has led the sector higher after the trucking reported better than expected adjusted second quarter earnings on revenues that exceeded estimates.

Steel, brokerage, and chemical stocks are also seeing notable strength in morning trading, while natural gas and semiconductor stocks have moved to the downside.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.7 percent, while Hong Kong’s Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has advanced by 0.8 percent, the U.K.’s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.6 percent.

In the bond market, treasuries are giving back ground after moving modestly higher in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.2 basis points at 2.124 percent.

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