U.S. Stocks Climb Off Worst Levels But Remain Mostly Lower

Stocks moved mostly lower in early trading on Tuesday, extending the pullback seen late in last Friday’s session. The major averages have subsequently climbed well off their worst levels of the day but remain in negative territory.

Currently, the Dow is down 178.24 points or 0.5 percent at 34,120.88 and the S&P 500 is down 14.25 points or 0.3 percent at 4,395.34. The tech-heavy Nasdaq is posting a more modest loss, down 13.42 points or 0.1 percent at 13,676.15.

The early weakness on Wall Street came as traders continued to cash in on recent strength in the markets, which lifted the Nasdaq and the S&P 500 to their best levels in over a year last week.

Selling pressure has waned over the course of the session, however, as traders look ahead to congressional testimony by Federal Reserve Chair Jerome Powell.

Powell is due to testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.

Traders are likely to pay close attention to Powell’s remarks, looking for additional clues about the outlook for rates after the Fed signaled further rate hikes last week.

Comments by a number of other Fed officials are also likely to attract attention in the coming days along with reports on weekly jobless claims and existing home sales.

On the U.S. economic front, a report released by the Commerce Department showed new residential construction in the U.S. unexpectedly skyrocketed in the month of May.

The Commerce Department said housing starts soared by 21.7 percent to an annual rate of 1.631 million in May after tumbling by 2.9 percent to a revised rate of 1.340 million in April.

Economists had expected housing starts to edge down to a rate of 1.400 million from the 1.401 million originally reported for the previous month.

The report said building permits also surged by 5.2 percent to an annual rate of 1.491 million in May after slumping by 1.4 percent to a revised rate of 1.417 million in April.

Building permits, an indicator of future housing demand, were expected to rise to a rate of 1.423 million from the 1.416 million originally reported for the previous month.

Sector News

Gold stocks continue to see substantial weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 4.0 percent to a three-month intraday low.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for August delivery tumbling $21.90 to $1,949.30 an ounce.

A significant decrease by the price of crude oil is also weighing on energy stocks, as crude for July delivery has slumped $1.52 to $70.26 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index is down by 2.5 percent and the
Philadelphia Oil Service Index is down by 2.3 percent.

Computer hardware, chemical and steel stocks are also seeing notable weakness, while housing stocks are bucking the downtrend following the upbeat housing starts data.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan’s Nikkei 225 Index inched up by 0.1 percent and Australia’s S&P/ASX 200 Index advanced by 0.9 percent, while China’s Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets all moved lower on the day. While the German DAX Index slid by 0.6 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both fell by 0.3 percent.

In the bond market, treasuries have moved to the upside after initially showing a lack of direction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.2 basis points at 3.717 percent.

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