U.S. Markets End Lower Tuesday On Volatile Trading

July 15, 2008 5:47 p.m. EST

New York, NY (AHN) - Volatile trading continues in the U.S. markets as all three major indices pared large morning losses to briefly trade positive before selling off into the close.

The Dow Jones closed lower 92 points or 0.8 percent while the S&P 500 shed 13 points or 1.1 percent. Tech squeaked out a gain with the Nasdaq Composite adding 3 points or 0.15 percent.

Financials were the main driver once again. The sector whipsawed all session, trading down as much as 5.7 percent, then swinging positive more than 2 percent only to close down 3 percent on Tuesday.

Financials rallied in the late morning after Treasury Secretary Henry Paulson basically asked for a blank check in order to buy Fannie Mae and Freddie Mac debt if needed. Both mortgage companies rallied off the news but gave back most of the move, finishing lower more than 26 percent.

Oil saw its biggest one day sell-off in nearly seven years, shedding roughly 5 percent to close at $138.50. The move was sparked by data out of OPEC that put 2008 demand growth at 1.20 percent, down from original estimates of 1.28 percent.

Four of 10 major economic sectors ended higher. The energy sector was the laggard, shedding 4.2 percent on the session. Healthcare was the biggest advancer, up 1.3 percent on Tuesday. Positive earnings news from Johnson & Johnson helped propel the sector higher.

Federal Reserve Chairman Ben Bernanke spoke before the Senate Banking Committee on Tuesday about higher inflation risks. The Fed raised its 2008 inflation forecast, yet also raised the growth outlook for 2008 Gross Domestic Product (GDP).

The June Producer Price Index (PPI) rose 1.8 percent, higher than the 1.4 percent markets were expecting. A higher increase in the index adds to inflation concerns. June retail sales were reported before Tuesday's open. Sales rose just 0.1 percent, short of the 0.4 percent growth economists expected.

Intel Corp. will be the first "big cap" tech stock to report second quarter earnings. They report after Tuesday's close.