Nasdaq briefly hits new intraday high; dollar gains eyed

U.S. stocks traded in a narrow range on Tuesday amid a stronger dollar, mixed economic data, and continued optimism on the Greece debt talks. ( Tweet This )

The Nasdaq Composite touched a fresh intraday high after a record close on Monday. However, the index soon turned lower to trade just below the flatline. The Dow Jones industrial average and S&P 500 also dipped in and out of negative territory after opening mildly higher.
"Today's biggest news was the strength in the dollar. That's probably the single biggest thing that's taken the rally and turned it negative," said James Meyer, chief investment officer at Tower Bridge Advisors.

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.
Investors also watched higher bond yields, which pressured utilities to fall more than 1 percent as the greatest laggard in the S&P 500.
"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 2.38 percent, off a session high of 2.42 percent. The 2-year yield rose to 0.67 percent.

The U.S. Treasury auctioned $26 billion 2-year notes at a high yield of 0.692 percent.
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 briefly 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."

European stocks closed higher on anticipation of resolution in the Greece debt crisis. Overnight, Japan's blue-chip Nikkei index also hit a 15-year high.
The anti-austerity Greek government presented new budget proposals on Monday, 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.

"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."

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.