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Stocks Give Back Ground After Initial Upward Move - U.S. Commentary

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Stocks showed a notable move to the upside in early trading on Tuesday but have given back some ground over the course of the morning. The major averages have pulled back off their highs of the session but remain in positive territory.

Currently, the major averages are holding on to modest gains. The Dow is up 44.77 points or 0.2 percent at 26,429.54, the Nasdaq is up 32.14 points or 0.4 percent at 8,008.15 and the S&P 500 is up 5.20 points or 0.2 percent at 2,910.78.

The initial strength on Wall Street partly reflected a positive reaction to earnings news from Dow components Johnson & Johnson (JNJ) and UnitedHealth (UNH).

Healthcare giant Johnson & Johnson is up by 2.7 percent after reporting first quarter results that exceeded analyst estimates and boosting its forecast for full-year sales growth.

On the other hand, shares of UnitedHealth have pulled back after an initial jump even though the health insurer reported better than expected first quarter results and raised its full-year earnings guidance.

Financial giant Bank of America (BAC) has also moved to the downside after reporting first quarter earnings that beat estimates but weaker than expected revenues.

The early buying interest was also partly offset by a report from the Federal Reserve showing industrial production unexpectedly edged lower in the month of March.

The report said industrial production dipped by 0.1 percent in March after inching up by 0.1 percent in February. Economists had expected production to rise by 0.2 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, noted the dip in industrial production in March completed a "weak first quarter in which industrial production contracted by 0.3% annualized, as the U.S. factory sector succumbed to the global manufacturing malaise."

Meanwhile, a separate report from the National Association of Home Builders showed a modest improvement in U.S. homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index inched up to 63 in April after holding at 62 in March, with the uptick matching expectations.

"Builders report solid demand for new single-family homes but they are also grappling with affordability concerns stemming from a chronic shortage of construction workers and buildable lots," said NAHB Chairman Greg Ugalde.

Semiconductor stocks have shown a strong move to the upside in morning trading, driving the Philadelphia Semiconductor Index up by 1.5 percent to a record intraday high.

Notable strength has also emerged among computer hardware stocks, while gold stocks are moving considerably lower along with the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei Index crept up by 0.2 percent, while China's Shanghai Composite Index soared by 2.4 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has risen by 0.3 percent, the U.K.'s FTSE 100 Index is up by 0.5 percent and the German DAX Index is up by 0.7 percent.

In the bond market, treasuries have moved lower after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.8 basis points at 2.581 percent.

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