Dow Giving Back Ground, Nasdaq Posting Another Strong Gain

After ending the previous session at a new record closing high, the Dow has given back some ground in morning trading on Tuesday. Meanwhile, the broader Nasdaq and S&P 500 are adding to yesterday’s gains.

In recent trading, the Nasdaq and the S&P 500 have reached new highs for the session. While the Dow is down 126.70 points or 0.4 percent at 32,826.76, the Nasdaq is up 157.50 points or 1.2 percent at 13,617.21 and the S&P 500 is up 9.74 points or 0.3 percent at 3,978.68.

The drop by the Dow partly reflects notable declines by American Express (AXP), Chevron (CVX) and Boeing (BA), although strong gains by tech giants Intel (INTC) and Apple (AAPL) have helped limit the downside for the blue chip index.

The Nasdaq is also benefiting from the continued strength among tech stocks, which comes as treasury yields continue to pull back after spiking last Friday.

The drop in yields, which move opposite of prices, comes as some traders are picking up treasuries following the release of a batch of disappointing U.S. economic data.

Before the start of trading, the Commerce Department released a report showing U.S. retail sales pulled back by much more than anticipated in the month of February.

The Commerce Department said retail sales plunged by 3.0 percent in February after soaring by an upwardly revised 7.6 percent in January.

Economists had expected retail sales to dip by 0.5 percent compared to the 5.3 percent spike originally reported for the previous month.

Excluding a drop in auto sales, retail sales still tumbled by 2.7 percent in February after skyrocketing by 8.3 percent in January. Ex-auto sales were expected to edge down by 0.1 percent.

The Federal Reserve also released a report showing an unexpected slump in U.S. industrial production in February, with steep drops in manufacturing and mining output more than offsetting a sharp increase in utilities output.

The Fed said industrial production tumbled by 2.2 percent in February after jumping by an upwardly revised 1.1 percent in January.

The pullback surprised economists, who had expected industrial production to climb by 0.6 percent compared to the 0.9 percent increase originally reported for the previous month.

The Fed said the severe winter weather in the south central region of the country in mid-February accounted for the bulk of the declines in output for the month.

Meanwhile, traders continue to look ahead to the Fed’s monetary policy announcement on Wednesday.

Traders will be paying close attention to any changes to the Fed’s statement as well as any revisions to the central bank’s forecasts for the economy, inflation and interest rates.

Semiconductor stocks are extending the strong upward move seen in the previous session, with the Philadelphia Semiconductor Index jumping by 2.6 percent.

Considerable strength has also emerged among software stocks, as reflected by the 2.6 percent advance by the Dow Jones U.S. Software Index.

On the other hand, energy stocks have come under pressure amid a steep drop by the price of crude oil. Crude for April delivery is slumping $1.35 to $64.04 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.5 percent and the NYSE Arca Oil Index is down by 3.2 percent.

Profit taking is also contributing to significant weakness among airline stocks, with the NYSE Arca Airline Index falling by 2.3 percent after ending Monday’s trading at its best closing level in almost three years.

Banking stocks have also shown a notable move to the downside, dragging the KBW Bank Index down by 1.9 percent. The index is pulling back further off the record closing high set last Friday.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index increased by 0.5 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index is up by 0.1 percent, the U.K.’s FTSE 100 Index is up by 0.5 percent and the German DAX Index is up by 0.9 percent.

In the bond market, treasuries are extending the rebound seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 1.592 percent.