The Nasdaq Composite touched a fresh intraday high after a record close on Monday. However, the index struggled to hold slight gains.
The morning’s data releases continued to show moderate economic growth, with a greater-than-expected decline in durable goods balancing out the best new home sales report since February 2008.
“Bad news isn’t good news anymore. Bad news is ok news,” said JJ Kinahan, chief strategist at TD Ameritrade. He added that if the S&P 500 fails to break past its record high of 2,130, the index could fall back down to near 2,070, the lower end of its recent trading range.
The Russell 2000 extended gains to hit a new high after also closing at a record on Monday.
“The small caps tend to be a good gauge for the risk-on trade,” said Adam Sarhan, CEO of Sarhan Capital. It “supports the notion that more investors are looking to buy stocks.”
Investors also watched higher bond yields and a stronger dollar.
“Considering the strength of the dollar and the rise in the yields this morning the strength of the (equity) markets is impressive,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
Treasury yields pared gains slightly, with the 10-year yield near 2.40 percent, while the dollar rose more than 1 percent against major world currencies. The euro fell to trade below $1.12, while the yen weakened to about 124 yen against the dollar.
The U.S. Treasury auctions $26 billion in 2-year notes at 1 p.m.
“I do believe Greece and news there in Europe is dictating today,” said Nick Raich, CEO of The Earnings Scout. “Make no mistake, if we don’t get another ‘kick the can down the road’ Greece is on the brink of disaster.”
Anticipation of resolution in the Greece debt crisis helped Japan’s blue-chip Nikkei index hit a 15-year high and supported broad gains in European stocks.
The anti-austerity Greek government presented new budget proposals, raising hopes that Athens will be able to secure a cash-for-reforms deal with its international creditors. A Greek default and exit form the euro zone could potentially have a negative effect on global markets.
The European Central Bank on Tuesday lifted the ceiling on emergency liquidity to Greek banks for a second time in two days, said Reuters, citing a banking source.
In the United States, any further signs that the economic recovery is picking up pace after a tepid first quarter could reinforce expectations for a September rise in U.S. interest rates. Data on Monday showed existing home sales jumped 5.1 percent in May to a 5-1/2 year high. Tuesday’s reports continued to indicate strength in the housing market but more tepid growth in the rest of the economy.
The FHFA Housing Price Index showed an increase of 0.3 percent in April. New home sales rose 2.2 percent in May to a more than seven-year high. In another encouraging sign, the Richmond manufacturing index rose to 6 in June, up from 1 in May.
U.S. durable goods data for May showed a decline of 1.8 percent, a greater decline than expected. Ex-transportation, the figure rose 0.5 percent. The core figure of non-defense capital goods orders excluding aircraft rose 0.4 percent, reversing a 0.3 percent decline in April.
“This is an economic recovery but very mixed and fragile,” Raich said. “We’re seeing that growth is going to pick up in the second quarter but not nearly as much as (the second quarter last year). The durable goods number for me continues to reinforce that.”
Growth in the U.S. manufacturing sector moderated in June for a third month in a row, slipping to its slowest pace since late 2013, according to Markit’s preliminary U.S. Manufacturing Purchasing Managers’ Index.
Federal Reserve Board Governor Jerome Powell said at a Wall Street Journal breakfast that he sees conditions for liftoff as soon as September, followed by a second hike in December, Dow Jones reported. He also said he sees growth around 2 percent this year, with positive signs from the pickup in wages and labor force participation.
The Dow Jones Industrial Average traded up 16 points, or 0.09 percent, at 18,135, with UnitedHealth leading advancers and Microsoft the greatest decliner.
The S&P 500 traded up 0.35 points, or 0.02 percent, at 2,123, with telecommunications leading five sectors higher and utilities the greatest laggard.
The Nasdaq traded down 13 points, or 0.26 percent, at 5,140.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 12.
Advancers were a touch ahead of decliners on the New York Stock Exchange, with an exchange volume of 164 million and a composite volume of 744 million in morning trade.
Crude oil futures for August delivery traded down 41 cents to $59.97 a barrel on the New York Mercantile Exchange. Gold futures fell $5.50 to $1,178.70 an ounce as of 10:43 a.m.
In corporate news:
BlackBerry–The handset maker missed estimates on both the top and bottom lines, but its tech and software licensing revenue jumped from a year earlier and its adjusted profit margins were also above expectations.
Darden Restaurants–The Olive Garden parent reported adjusted quarterly profit of $1.08 per share, 15 cents above estimates, with revenue also beating. Darden also said it would pursue a spin-off of its real estate assets into a REIT, followed by a leaseback of the properties involved.
AT&T–The stock was upgraded to “overweight” from “neutral” at Barclays, which cited the potential positive effects of AT&T’s purchase of DirecTV.