Stocks stayed mixed in afternoon trades Tuesday as traders mulled positive economic data against the prospect of higher interest rates.
The Dow Jones industrial average was down 0.5% and the S&P 500 dipped 0.2% as both indexes reversed lower after posting modest early gains. The Nasdaq composite edged up 0.1%, led by biotech stocks. Volume was running above Friday’s levels on both the Nasdaq and the NYSE in the stock market today.
Government data released Tuesday showed that personal income rose 0.4% in April, in line with the Econoday forecast, while spending jumped 1%, topping the expected 0.7% gain. The PCE index, a measure of inflation, rose 0.3%, meeting views.
Meanwhile, the latest Case-Shiller survey of 20 key cities showed home prices rising 0.9% in March, above the consensus forecast for a 0.7% gain. Year over year, prices rose 5.4%, also beating views.
The better-than-expected reports reinforced sentiment that the Federal Reserve will raise interest rates at its meeting in June or July.
Steel, mining and biotech stocks were among the biggest gainers, while beverage and retail stocks lagged.
Acuity Brands (AYI) was among the best performers in the IBD 50. The producer of lighting products for the residential, commercial and industrial markets rose 2% and cleared a flat base with a 260.93 buy point. Volume was running about 32% above normal, a little below what you’d like to see when a stock clears its buy point.
Westar Energy (WR) paced the S&P 500, jumping 7.4% to a new high after Great Plains Energy (GXP) said it would by the Kansas-based electricity provider for $8.6 billion. Missouri-based Great Plains plummeted 5.6%.
Steel stocks rose after the Commerce Department late last week jacked up anti-dumping tariffs on corrosion-resistant steel products imported from China, India, South Korea, Italy and Taiwan. China faces extra duties of up to 450%.
U.S. Steel (X) was up nearly 2%, paring an early gain of more than 3%. It’s still deep within a bottoming base. In a bottoming base, a stock has made an extremely deep decline, usually 50% to 80% or more off its high, but is starting to show signs of bottoming out while forming a base that presents an opportunity for stock to break out to 52-week highs. Numerous bottoming bases formed within the tech sector in the aftermath of the 2000-2002 dot-com crash.
AK Steel (AKS) jumped 4.5% and cleared its 50-day moving average.