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Stocks Move Lower Amid Trepidation Ahead Of Fed Announcement - U.S. Commentary

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Stocks have come under pressure in early trading on Tuesday, giving back some ground following the rally seen in the previous session. The major averages have all slid into negative territory but remain well off their recent lows.

Currently, the major averages are stuck in the red but off their lows for the young session. The Dow is down 149.25 points or 0.8 percent at 17,828.17, the Nasdaq is down 11.43 points or 0.2 percent at 4,918.08 and the S&P 500 is down 10.38 points or 2,070.81.

The early weakness on Wall Street may be partly due to profit taking following yesterday's gains, which largely offset the losses posted last week.

Trepidation ahead of the Federal Reserve's monetary policy announcement tomorrow afternoon is also weighing on the markets in early trading.

The Fed is not expected to announce an increase in interest rates, but traders will be paying close attention to any changes to the accompanying statement.

In light of recent upbeat employment data, many analysts expect the Fed to remove the word "patient" regarding when it plans to begin normalizing monetary policy.

However, the Commerce Department released a report before the start of trading showing a substantial decrease in housing starts in the month of February.

The report said housing starts plummeted by 17.0 percent to an annual rate of 897,000 in February from the revised January estimate of 1.081 million. Economists had been expecting housing starts to dip to 1.048 million.

With the much bigger than expected decrease, housing starts fell to their lowest annual rate since January of last year.

On the other hand, the report said building permits climbed 3.0 percent to an annual rate of 1.092 million in February from the revised January rate of 1.060 million.

Building permits, an indicator of future housing demand, had been expected to inch up to 1.058 million from the 1.053 million originally reported for January.

Semiconductor stocks have shown a significant move to the downside in early trading, dragging the Philadelphia Semiconductor Index down by 1.1 percent. Micron Technology (MU) and ARM Holdings (ARMH) are posting notable losses.

Chemical, oil service, and pharmaceutical stocks are also seeing early weakness, although selling pressure has remained somewhat subdued.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index advanced by 1 percent, while China's Shanghai Composite Index surged up by 1.6 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index has edged up by 0.1 percent, the French CAC 40 Index is down by 0.9 percent and the German DAX Index is down by 1.6 percent.

In the bond market, treasuries are extending a recent upward trend ahead of the looming Fed decision. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.9 basis points at 2.059 percent.

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