After failing to sustain an initial move to the upside, stocks have shown a lack of direction over the course of the trading day on Tuesday. While the Dow has managed to remain in positive territory, the Nasdaq and the S&P 500 have been bouncing back and forth across the unchanged line.
Currently, the major averages are turning in a mixed performance. The Nasdaq is down 21.81 points or 0.2 percent at 13,726.93, but the Dow is up 126.04 points or 0.4 percent at 34,655.49 and the S&P 500 is up 2.52 points or 0.1 percent at 4,206.63.
The initial strength on Wall Street came as upbeat manufacturing data from overseas added to optimism about the outlook for the global economy.
Data showed Chinese manufacturing activity expanded at a faster pace in the month of May, while Eurozone manufacturing activity expanded at a record pace in May despite supple bottlenecks.
The Institute for Supply Management also released a report showing manufacturing activity in the U.S. expanded at a slightly faster pace in May.
The ISM said its manufacturing PMI inched up to 61.2 in May from 60.7 in April, with a reading above 50 indicating growth in the manufacturing sector. The uptick surprised economists, who had expected the index to come in unchanged.
Buying interest waned shortly after the start of trading, however, as traders continue to express uncertainty about inflation and the outlook for monetary policy.
Traders may also have been reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
Economists currently expect employment to jump by 664,000 jobs in May after climbing by 266,000 jobs in April. The unemployment rate is also expected to dip to 5.9 percent from 6.1 percent.
The Dow is benefiting from a strong gain by Boeing (BA), which is up by 2 percent after Cowen upgraded its rating on the aerospace giant’s stock to Outperform from Market Perform.
Despite the lackluster performance by the broader markets, energy stocks continue to see substantial strength amid a sharp increase by the price of crude oil.
Crude oil for July delivery has pulled back well off its highs but remains up by $1.28 at $67.60 a barrel after OPEC and its allies agreed to stick to a plan to gradually increase production.
Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 3.8 percent, the NYSE Arca Natural Gas Index is up by 3.7 percent and the NYSE Arca Oil Index is up by 3.3 percent.
Steel stocks also continue to see significant strength following the upbeat manufacturing data, with the NYSE Arca Steel Index surging up by 3.2 percent.
Tobacco, computer hardware and airline stocks are also seeing considerable strength on the day, while pharmaceutical stocks have shown a notable move to the downside.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while China’s Shanghai Composite Index rose by 0.3 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1 percent, the U.K.’s FTSE 100 Index advanced by 0.8 percent and the French CAC 40 Index climbed by 0.7 percent.
In the bond market, treasuries have come under pressure following the upbeat manufacturing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.1 basis points at 1.622 percent.
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