U.S. Stocks Pull Back Off Early Highs But Continue To See Modest Strength

After moving to the upside early in the session, stocks have given back ground over the course of the trading day on Tuesday. The major averages have pulled back well off their highs of the session but currently remain in positive territory.

The Dow is up 169.47 points or 0.4 percent at 42,466.59, the Nasdaq is up 31.43 points or 0.2 percent at 19,119.53 and the S&P 500 is up 10.66 points or 0.2 percent at 5,846.88.

The initial strength on Wall Street came following the release of a Labor Department report showing producer prices rose by slightly less than expected in the month of December.

The Labor Department said its producer price index for final demand crept up by 0.2 percent in December after climbing by 0.4 percent in November. Economists had expected producer prices to rise by 0.3 percent.

Meanwhile, the report said the annual rate of producer price growth accelerated to 3.3 percent in December from 3.0 percent in November. The acceleration matched economist estimates.

The smaller than expected monthly increase by producer prices helped ease recent concerns about the outlook for inflation and interest rates, although the faster annual growth has kept buying interest somewhat subdued.

Traders may also be reluctant to make more significant moves ahead of the release of a more closely watched report on consumer price inflation on Wednesday.

Economists currently expect consumer prices to rise by 0.3 percent in December, matching the increase seen in November. The annual rate of growth is expected to accelerate to 2.9 percent from 2.7 percent.

Sector News

Networking stocks have shown a significant move to the upside, driving the NYSE Arca Networking Index up by 2.3 percent.

Gold stocks have also moved sharply higher on the day, resulting in a 2.2 percent jump by the NYSE Arca Gold Bugs Index.

The rally by gold stocks comes amid a modest increase by the price of the precious metal, with gold for February delivery rising $6.10 to $2,684.70 an ounce.

Substantial strength is also visible among airline stocks, as reflected by the 2.2 percent surge by the NYSE Arca Airline Index.

Housing, financial and utilities stocks are also seeing notable strength on the day, while pharmaceutical stocks are seeing considerable weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday. China’s Shanghai Composite Index surged by 2.5 percent and Hong Kong’s Hang Seng Index jumped by 1.8 percent, although Japan’s Nikkei 225 Index bucked the uptrend and slumped by 1.8 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.2 percent, the French CAC 40 Index is up by 0.4 percent and the German DAX Index is up by 0.6 percent.

In the bond market, treasuries have pulled back near the unchanged line after an initial move to the upside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 4.807 percent.

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