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Stocks Little Changed After Recovering From Initial Drop - U.S. Commentary


After an initial move to the downside, stocks have rebounded over the course of morning trading on Tuesday. The major averages have climbed off their lows of the session and are now lingering near the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 6.02 points or 0.1 percent at 7,478.43, the Dow is down 28.45 points or 0.1 percent at 25,854.80 and the S&P 500 is down 0.85 points or less than a tenth of a percent at 2,774.75.

The initial weakness on Wall Street was partly due to profit taking following the strong upward move shown by stocks last week.

The advance seen last Friday lifted the Dow and the Nasdaq to their best closing levels in three months and the S&P 500 reached a two-month closing high.

Selling pressure waned shortly after the start of trading, however, with a significant advance by Walmart (WMT) likely to help limit the downside for the markets.

Shares of Walmart have moved notably higher after the retail giant reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Traders may also be reluctant to make significant moves amid uncertainty about the potential for a trade deal between the U.S. and China as the next round of trade talks get underway in Washington, D.C. this week.

News that China accused the U.S. of attempting to curtail its technology development by putting pressure on allies to shun networks supplied by Huawei Technologies has raised concerns about tensions between the world's two largest economies.

On the U.S. economic front, the National Association of Home Builders released a report showing a much bigger than expected improvement in homebuilder confidence in the month of February.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 62 in February after rising to 58 in January. Economists had expected the index to inch up to 59.

With the increase, the index continued to recover after hitting a more than three-year low of 56 in December.

"Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment," said NAHB Chairman Randy Noel.

He added, "In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season."

Gold stocks have moved sharply higher over the course of morning trading, driving the NYSE Arca Gold Bugs Index up by 3.2 percent to a seven-month intraday high.

The strength among gold stocks comes amid a significant increase by the price of the precious metal, with gold for April delivery surging up $17 to $1,339.10 an ounce.

On the other hand, substantial weakness is visible among telecom stocks, as reflected by the 3.9 percent nosedive by the NYSE Arca North American Telecom Index. The index is pulling back after jumping to a two-month closing high last Friday.

Most of the other major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index is marginally lower, the French CAC 40 Index is down by 0.2 percent and the U.K.'s FTSE 100 Index is down by 0.5 percent.

In the bond market, treasuries have moved higher after showing a slight decrease last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.5 basis points at 2.641 percent.

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