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U.S. Stocks Pull Back Off Early Highs But Remain Mostly Positive

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After an initial move to the upside, stocks have given back some ground over the course of morning trading on Tuesday but remain mostly positive. With the gains on the day, the major averages are extending the upward trend seen over the past several sessions.

Currently, the major averages are holding on to notable gains. The Dow is up 112.60 points or 0.4 percent at 26,175.28, the Nasdaq is up 56.47 points or 0.7 percent at 7,879.64 and the S&P 500 is up 14.49 points or 0.5 percent at 2,901.22.

The early strength on Wall Street partly reflected recent upward momentum, which has helped stocks bounce well off the multi-month lows set last month.

Optimism about a potential interest rate cut by the Federal Reserve has contributed to the recent rebound on Wall Street, with the central bank due to make its latest monetary policy decision next week.

The Fed is widely expected to leave interest rates unchanged next week, although the chances for a rate cut next month have spiked since Fed Chairman Jerome Powell pledged to act "as appropriate" to support the economic expansion.

A report from the Labor Department showing wholesale price inflation remains contained may add to confidence that the Fed can feel comfortable lowering rates.

The Labor Department said its producer price index for final demand inched up by 0.2 percent in May after rising by 0.2 percent in April. The uptick in prices matched economist estimates.

Excluding food and energy prices, core producer prices rose by 0.2 percent in May after edging up by 0.1 percent in the previous month. The increase in core prices also met expectations.

The report also said the annual rate of growth in producer prices slowed to 1.8 percent from 2.2 percent in April, coming in below estimates for an increase of 2.0 percent.

The annual rate of core producer price growth also dipped to 2.3 percent in May from 2.4 percent in April, matching expectations.

On Wednesday, the Labor Department is scheduled to release its more closely watched report on consumer price inflation in May.

Steel stocks have moved sharply higher in morning trading, resulting in a 3 percent spike by the NYSE Arca Steel Index. The index reached its best intraday level in a month early in the session.

The rally by steel stocks comes after following news China will allow local governments to use proceeds from special bonds as capital for major infrastructure projects.

Banking stocks are also seeing significant strength, moving notably higher along with computer hardware, oil service, and semiconductor stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.3 percent, while China's Shanghai Composite Index spiked by 2.6 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has jumped by 1.2 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.'s FTSE 100 Index is up by 0.4 percent.

In the bond market, treasuries are extending the notable downward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 2.159 percent.

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