Nasdaq Recovers From Early Weakness But Dow, S&P 500 Close In The Red

Stocks moved mostly lower in early trading on Tuesday but regained ground over the course of the session. The major averages climbed well off their worst levels of the day, with the tech-heavy Nasdaq peeking above the unchanged line.

The major averages finished the day mixed. While the Nasdaq inched up 13.94 points or 0.1 percent to 14,857.71, the S&P 500 edged down 7.04 points or 0.2 percent to 4,756.50 and the Dow fell 157.85 points or 0.4 percent to 37,525.16.

The early weakness on Wall Street came as some traders looked to cash in on Monday’s strong gains amid lingering uncertainty about the outlook for interest rates.

While the Federal Reserve is widely expected to leave interest rates unchanged later this month, traders have recently become increasingly skeptical about whether the central bank will cut rates in March.

CME Group’s FedWatch Tool still indicates a 60.9 percent chance the Fed will lower rates by a quarter point in March, but that figure is well below recent highs.

Selling pressure waned over the course of the session, however, as traders seemed reluctant to make move significant bets ahead of the release of key inflation data later this week.

The Labor Department is due to release its reports on consumer and producer price inflation, which could have a significant impact on the outlook for rates.

On the U.S. economic front, the Commerce Department released a report showing the U.S. trade deficit unexpectedly shrank in the month of November.

The report said the trade deficit narrowed to $63.2 billion in November from a revised $64.5 billion in October. Economists had expected the trade deficit to widen to $65.0 billion from the $64.3 billion originally reported for the previous month.

The unexpectedly smaller trade deficit came as the value of imports tumbled by 1.9 percent to $316.9 billion, while the value of export slumped by 1.9 percent to $253.7 billion.

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