U.S. Stocks Regain Ground After Early Move To The Downside

After an early move to the downside, stocks have shown a notable turnaround over the course of the trading session on Tuesday. The major averages have bounced well off their early lows and into positive territory.

Currently, the major averages are hovering near their best levels of the day. The Dow is up 166.39 points or 0.5 percent at 32,923.93, the Nasdaq is up 43.06 points or 0.4 percent at 10,589.09 and the S&P 500 is up 17.41 points or 0.5 percent at 3,835.07.

The rebound on Wall Street comes as some traders look to pick up stocks at relatively reduced levels following recent weakness.

The major averages closed lower for four consecutive session, ending Monday’s trading at their lowest closing levels in over a month.

Trading activity has been somewhat subdued, however, with some traders reluctant to get back into the markets amid lingering concerns the Federal Reserve’s aggressive interest rate hikes will tip the economy into a recession.

On Friday, the Commerce Department is due to release its report on personal income and spending, which includes a reading on inflation said to be preferred by the Fed.

With Fed Chair Jerome Powell saying the central bank will require “substantially more evidence” inflation is on a sustained downward trend before halting its rate hikes, traders are likely to keep a close eye on the inflation reading.

Reports on consumer confidence, new and existing home sales and durable goods orders are also likely to attract attention in the coming days.

In U.S. economic news, the Commerce Department released a report showing a decrease in new residential construction in the U.S. in the month of November.

The report said housing starts fell by 0.5 percent to an annual rate of 1.427 million in November after tumbling by 2.1 percent to a revised rate of 1.434 million in October.

Economists had expected housing starts to decline by 0.7 percent to a rate of 1.415 million from the 1.425 million originally reported for the previous month.

The Commerce Department also said building permits plunged by 11.2 percent to an annual rate of 1.342 million in November after slumping by 3.3 percent to a revised rate of 1.512 million in October.

Building permits, an indicator of future housing demand, were expected to dive by 3.7 percent to 1.470 million from the 1.526 million originally reported for the previous month.

Gold stocks have moved sharply higher on the day, resulting in a 4.6 percent spike by the NYSE Arca Gold Bugs Index.

The rally by gold stocks comes amid a notable increase by the price of the precious metal, with gold for February delivery jumping $31 to $1,828.70 an ounce.

Substantial strength is also visible among steel stocks, as reflected by the 3.2 percent surge by the NYSE Arca Steel Index.

Oil service stocks are also seeing considerable strength amid an increase by the price of crude oil, driving the Philadelphia Oil Service Index up by 2.8 percent.

Computer hardware, airline and brokerage stocks have also shown notable moves to the upside, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index plunged by 2.5 percent, while China’s Shanghai Composite Index slumped by 1.1 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.3 percent, the French CAC 40 Index is down by 0.2 percent and the German DAX Index is down by 0.3 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 9.6 basis points at 3.677 percent.