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Major Averages Holding On To Modest Gains In Mid-Day Trading - U.S. Commentary

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After failing to sustain an initial upward move, stocks have given back some ground but remain mostly positive in mid-day trading on Tuesday. The major averages reached six-month intraday highs in early trading.

Currently, the major averages are hovering modestly above the unchanged line. The Dow is up 60.77 points or 0.2 percent at 26,445.54, the Nasdaq is up 26.37 points or 0.3 percent at 8,002.39 and the S&P 500 is up 3.48 points or 0.1 percent at 2,909.06.

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 1.7 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.

Sector News

Semiconductor stocks continue to see considerable strength in mid-day trading, with the Philadelphia Semiconductor Index up by 1.4 percent after reaching a record intraday high.

Notable strength also remains visible among computer hardware stocks, as reflected by the 1.1 percent gain being posted by the NYSE Arca Computer Hardware Index.

Western Digital (WDC) is posting a strong gain after Deutsche Bank upgraded its rating on the hard drive maker's stock to Buy from Hold.

On the other hand, gold stocks have come under pressure on the day, dragging the NYSE Arca Gold Bugs Index down by 2.1 percent.

The weakness in the gold sector comes amid a steep drop by the price of the precious metal, with gold for June delivery tumbling $13.30 to $1,278 an ounce.

Commercial real estate stocks have also moved significantly lower over the course of the session, resulting in a 1.6 percent drop by the Dow Jones Real Estate Index.

Other Markets

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 also moved to the upside on the day. While the German DAX Index climbed by 0.7 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both rose by 0.4 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 3.7 basis points at 2.590 percent.

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