WASHINGTON (dpa-AFX) - Stocks have moved mostly higher during trading on Tuesday, with the major averages all moving to the upside following the mixed performance seen in the previous session. With the upward move, the Dow and the S&P 500 have reached new record intraday highs.
The major averages have pulled back off their best levels in recent trading but remain positive. The Dow is up 157.71 points or 0.4 percent at 41,779.79, the Nasdaq is up 130.35 points or 0.7 percent at 17,722.47 and the S&P 500 is up 27.88 points or 0.5 percent at 5,660.97.
The strength on Wall Street comes amid optimism about the outlook for interest rates ahead of the Federal Reserve's monetary policy announcement on Wednesday.
While the Fed is widely expected to lower interest rates, there remains some debate about the size of the rate cut.
CME Group's FedWatch Tool is currently indicating a 61 percent chance of a half point rate cut and a 39 percent chance of a quarter point rate cut.
Whether the Fed decides to cut rates by 25 or 50 basis points, the central bank is still expected to continue lowering rates over the remainder of the year.
Traders have also reacted positively to a Commerce Department report unexpectedly showing a modest increase by U.S. retail sales in the month of August.
The Commerce Department said retail sales inched up by 0.1 percent in August after surging by an upwardly revised 1.1 percent in July.
The uptick surprised economists, who had expected retail sales to dip by 0.2 percent compared to the 1.0 percent jump originally reported for the previous month.
Excluding a slight pullback by sales by motor vehicle and parts dealers, retail sales still crept up by 0.1 percent in August after climbing by 0.4 percent in July. Ex-auto sales were expected to rise by 0.2 percent.
'Markets were quick to dismiss the report in hopes the FOMC has already made up its mind about a 50bp cut tomorrow,' said FHN Financial Economic Analyst Mark Streiber. 'We agree that one retail sales report would be unlikely to move FOMC members, but we are still on the side of a 25bp cut tomorrow.'
Sector News
Airline stocks are turning in some of the market's best performances on the day, with the NYSE Arca Airline Index soaring by 3.1 percent to its best intraday level in over a month.
A notable increase by the price of crude oil is also contributing to significant strength among oil service stocks, as reflected by the 2.1 percent surge by the Philadelphia Oil Service Index.
Computer hardware, banking and brokerage stocks are also seeing considerable strength, while some weakness is visible among pharmaceutical stocks.
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 slumped by 1.0 percent, while Hong Kong's Hang Seng Index surged by 1.4 percent.
Meanwhile, the major European markets have all moved higher on the day. While the U.K.'s FTSE 100 Index is up by 0.4, the German Index and the French CAC 40 Index are both up by 0.6 percent.
In the bond market, treasuries have shown a modest move to the downside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.7 basis points at 3.638 percent.
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