Stocks Give Back Ground But Continue To See Modest Strength - U.S. Commentary

(RTTNews) - After moving notably higher at the open, stocks have given back some ground over the course of the trading day on Tuesday. The major averages have pulled back well off their highs for the session but remain in positive territory.

Currently, the major averages are clinging to modest gains. The Dow is up 22.40 points or 0.1 percent at 17,618.75, the Nasdaq is up 21.88 points or 0.4 percent at 4,980.35 and the S&P 500 is up 4.06 points or 0.2 percent at 2,061.70.

The initial strength on Wall Street was partly due to bargain hunting following yesterday's sell-off, which pulled the Dow down to its lowest closing level in almost five months.

The S&P 500 also ended the previous session at its worst closing level in three months, while the Nasdaq dropped to a nearly two-month closing low.

Continued concerns about Greece helped limit the upside for the markets, however, as the debt-laden country appears set to default on a 1.55 billion euro payment due to International Monetary Fund later today.

Reports had suggested that Greece and its creditors might open a new round of negotiations, but German Chancellor Angela Merkel said any new talks would have to wait until after a Greek referendum on Sunday.

Strategists at Bank of America Merrill Lynch said, "Greece continues to dominate the headlines again, with a surprising referendum likely to drive near-term sentiment."

"Still, for our broader macro view, we continue to expect robust U.S. growth, a stronger U.S. dollar and a Fed rate hike in September," they added.

With the focus on Greece, traders have largely shrugged off the latest batch of U.S. economic data, including reports on home prices, consumer confidence and Chicago-area business activity.

Sector News

Despite the pullback by the broader markets, airline stocks continue to see considerable strength, with the NYSE Arca Airline Index surging up by 1.8 percent after plunging by 3.5 percent on Monday. China Southern Airlines (ZNH) is posting a standout gain, jumping by 7.3 percent.

Significant strength also remains visible among biotechnology stocks, as reflected by the 1.6 percent gain being posted by the NYSE Arca Biotechnology Index. The index is rebounding after falling sharply over the four previous sessions.

Meanwhile, steel stocks have come under pressure on the day, dragging the NYSE Arca Steel Index down by 2 percent. With the drop, the index has fallen to a six-year low.

Notable weakness has also emerged among electronic storage and gold stocks, which are extending recent downward moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region showed notable rebounds during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

Meanwhile, the major European markets moved notably lower over the course of the session. While the German DAX Index slumped by 1.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index tumbled by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries have climbed back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.328 percent.