U.S. equities closed lower on Tuesday as Wall Street digested better than expected housing data and mixed earnings results from two Dow components while eyeing the the release of the Federal Reserve's minutes. (Tweet This)
"I think the market is getting some mixed messages here," said Art Hogan, chief market strategist at Wunderlich Securities, adding that while housing has improved, consumer spending has shifted in the U.S.
The Dow and the S&P 500 both flirted with gains during the session, but failed to hold their ground in positive territory. The Nasdaq Composite was the greatest laggard as the iShares Nasdaq Biotechnology ETF and shares of Apple both traded down.
U.S. housing starts data for July came in at 1.206 million, above what economists expected and near an eight-year high. June's starts were also revised higher to a 1.20 million-unit rate from the previously reported 1.17 million-unit pace.
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"Bottom line, the nice uptick in single family starts certainly follows the better home builder sentiment we saw from the NAHB as a dearth of inventories is hopefully going to now be met by improved supply. We certainly have a ways to go as at 782k, single family starts are still running 25% below the 30 year average," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
The positive data is especially important given the fact that the Federal Reserve is scheduled to release the minutes from its July meeting Wednesday at 2 p.m., said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
"The housing data gives the Fed another piece of ammunition to move [sooner rather than later], and that's certainly weighing on the markets," Luschini said.
"I think the fact that the Fed minutes will be released tomorrow is an important event and investors will certainly key on that tomorrow," said William Lynch, director of investments at Hinsdale Associates.
Wal-Mart reported quarterly earnings that missed analysts' expectations and also cut its full-year guidance, while Home Depot posted better than expected same-store sales. Shares of Wal-Mart closed down 3.37 percent, while Home Depot's stock ended 2.59 percent higher.
"The fact that Wal-Mart lowered its guidance was a real blow to retail earnings," said JJ Kinahan, chief strategist at TD Ameritrade, adding that while Home Depot's earnings were positive, they were also expected as the company's stock has been bolstered by a recovery in the housing sector.