Stocks Give Back Ground After Initial Upward Move - U.S. Commentary

(RTTNews) - Stocks once again failed to sustain an initial upward move and have given back ground over the course of the trading day on Tuesday. The major averages have pulled back well off their highs for the session, with the Dow and the S&P 500 briefly dipping below the unchanged line.

Currently, the major averages are all in positive territory on the day. The Dow is up 36.01 points or 0.2 percent at 16,434.58, the Nasdaq is up 30.83 points or 0.7 percent at 4,668.81 and the S&P 500 is up 3.63 points or 0.2 percent at 1,927.30.

The initial strength on Wall Street partly reflected a positive reaction to Chinese efforts to stabilize the yuan, which spiked higher following recent weakness.

China's Shanghai Composite Index subsequently edged up by 0.2 percent on the day despite declines by many of the other major Asian markets.

Nonetheless, the early buying interest was partly offset by a substantial downturn by the price of crude oil, which has fallen to a new twelve-year low.

Crude oil for February delivery is currently tumbling $1.19 to $30.22 a barrel after plunging $1.75 to $31.41 a barrel on Monday.

A steep drop by shares of Alcoa (AA) may also have weighed on the markets, with the aluminum giant plummeting by 9.5 percent after kicking off the earnings season after the close of yesterday's trading.

Alcoa reported fourth quarter earnings that exceeded expectations, although its revenues came in slightly shy of estimates. The company also forecast record aluminum demand for the current year.

JP Morgan (JPM), Intel (INTC), Citigroup (C), and Wells Fargo (WFC) are due to report their quarterly results later in the week.

Among individual stocks, shares of Apollo Education Group (APOL) have moved sharply higher amid reports Apollo Global Management (APO) is in talks to acquire the for-profit education company.

Yoga wear maker Lululemon (LULU) is also posting a strong gain after raising its fourth quarter guidance on stronger than expected holiday sales.

On the other hand, shares of United Continental (UAL) have moved to the downside after the airline said its fourth quarter passenger revenue may fall more than expected.

Sector News

Despite the pullback by the broader markets, considerable strength remains visible among computer hardware stocks. The NYSE Arca Computer Hardware Index is up by 3.2 percent, bouncing off its lowest closing level in over two years.

Super Micro Computer (SMCI) has helped to lead the hardware sector higher after forecasting fiscal second quarter results above analyst estimates.

Trucking stocks also continue to see some strength on the day, with the Dow Jones Trucking Index up by 1.1 percent. The index ended the previous session at its lowest closing level in well over a year.

On the other hand, gold stocks have shown a substantial move to the downside, dragging the NYSE Arca Gold Bugs Index down by 4.1 percent. With the steep drop, the index is pulling back further off last Thursday's two-month closing high.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, with gold for February delivery sliding $9.90 to $1,086.30 an ounce.

Natural gas, steel, and oil service stocks have also come under pressure on the day, extending recent downward trends.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 2.7 percent, while Hong Kong's Hang Seng Index dropped by 0.9 percent.

Meanwhile, the major European markets showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 1 percent, the French CAC 40 Index and the German DAX Index jumped by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries have turned higher over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 2.126 percent.