After moving sharply higher in early trading on Tuesday, stocks have given back some ground over the course of the session. Renewed concerns about the financial situation in Europe have contributed to the pullback by the markets.
The major averages have pulled back well off their best levels of the day but currently remain in positive territory. The Dow is up 79.84 points or 0.6 percent at 12,534.67, the Nasdaq is up 11.44 points or 0.4 percent at 2,848.97 and the S&P 500 is up 7.24 points or 0.6 percent at 1,325.06.
The pullback by stocks came as the euro came under pressure on news that Egan Jones downgraded Spain's credit rating to BB- from B.
"Spain will inevitably be faced with sizable payments to support its banking sector and for its weaker provinces," Egan-Jones said in a statement on Tuesday. "Assets of Spain's largest two banks exceed its GDP."
The rally seen in early trading was partly due to the latest news out of Greece, with recent polls showing an increase in support for the political parties that back the austerity measures required to receive the international bailout funds.
While the polls suggest that the anti-bailout Syriza party would still come in second, the pro-bailout New Democracy party could win enough seats to form a coalition government with the socialist Pasok party. The elections are scheduled to be held June 17th.
Peter Boockvar, managing director at Miller Tabak, said, "Convincing the Greeks that he can renege on the budget agreements with the EU/IMF and still expect to get money from them and stay in the euro is becoming more difficult than Syriza party leader Tsipras had thought."
"His poll numbers are dropping compared to the New Democracy party who wants the euro and will mostly stick to the country's deal with the EU/IMF," Boockvar added.
Speculation that China will announce further stimulus measures also contributed to the early strength on Wall Street, overshadowing a report from the Conference Board showing a notable deterioration in U.S. consumer confidence in the month of May.
While most of the major sectors have pulled back off their best levels of the day, significant strength remains visible among steel stocks. Reflecting the strength in the steel sector, the NYSE Arca Steel Index is up by 1.6 percent.
Networking stocks also continue to post strong gains in mid-day trading, with the NYSE Arca Networking Index up by 1.6 percent. Acme Packet (APKT) and Polycom (PLCM) are turning in two of the sector's best performances.
Oil service, natural gas, chemical, and semiconductor stocks also continue to see considerable strength, although buying interest has waned from earlier in the session.
On the other hand, gold stocks have come under pressure on the day, dragging the NYSE Arca Gold Bugs Index down by 2.2 percent. The weakness in the sector comes as gold for June delivery is falling $10.90 to $1,558 an ounce.
In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index surged up by 1.4 percent.
The major European markets also moved higher on the day. The U.K.'s FTSE 100 Index rose by 0.7 percent, while the German DAX Index and the French CAC 40 Index jumped by 1.2 percent and 1.4 percent, respectively.
In the bond market, treasuries have moved notably higher, benefiting from the news about Spain's credit rating. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.4 basis points at 1.711 percent.
by RTT Staff Writer
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