Stocks Extend Recovery, Climbing Into Positive Territory - U.S. Commentary

(RTTNews) - After coming under pressure in early trading on Tuesday, stocks have shown a substantial turnaround over the course of the trading session. The major averages have bounced well off their lows for the session and into positive territory.

Currently, the major averages are posting modest gains on the day. The Dow is up 28.76 points or 0.2 percent at 18,069.13, the Nasdaq is up 7.95 points or 0.2 percent at 5,090.88 and the S&P 500 is up 3.64 points or 0.2 percent at 2,115.37.

The initial weakness on Wall Street was partly due to continued concerns about Greece and the possibility of a default by the debt-ridden nation.

The major averages did not see much follow through on the early drop, however, as traders seemed reluctant to make significant moves ahead of the release of some key economic data in the coming days.

Reports on private sector employment, international trade and service sector activity are likely to be in focus on Wednesday along with the Federal Reserve's Beige Book report.

Weekly jobless claims and labor productivity data is also due to be released on Thursday, although the focus is likely to remain on the monthly jobs report on Friday.

Economists currently expect the Labor Department report to show an increase of about 220,000 jobs in May, while the unemployment rate is expected to hold at 5.4 percent.

The subsequent recovery by the markets may partly have reflected comments by Federal Reserve Governor Lael Brainard.

Brainard said the Fed's first interest rate hike could come before the end of the year but said the case for liftoff is not imminent amid signs of continued economic weakness in the second quarter.

Among individual stocks, shares of PVH Corp. (PVH) have moved sharply higher on the day after the apparel maker reported better than expected first quarter results and raised its full year guidance. The company also announced a $500 million stock buyback.

Restaurant and retail store chain Cracker Barrel (CBRL) is also turning in a strong performance after the company beat third quarter earnings estimates, raised its quarterly dividend and declared a special dividend of $3 per share.

On the other hand, shares of Intel (INTC) have come under pressure on the day after BMO Capital downgraded its rating on the semiconductor giant to Market Perform from Outperform.

Sector News

Steel stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 4.1 percent. The index is rebounding after ending Monday's trading at its worst closing level in over a month.

Cliffs Natural Resources (CLF) and U.S. Steel (X) are leading the sector higher, jumping by 7.2 percent and 6.7 percent, respectively.

Considerable strength has also emerged among oil service stocks, as reflected by the 3 percent gain being posted by the Philadelphia Oil Service Index. The strength in the sector comes as crude for July delivery is climbing $0.77 to $60.97 a barrel.

Similarly, gold stocks have moved higher along with the price of the precious metal, resulting in a 1.9 percent gain by the NYSE Arca Gold Bugs Index.

On the other hand, significant weakness remains visible among utilities stocks. Reflecting the weakness in the sector, the Dow Jones Utilities Average is down by 1.5 percent.

CenterPoint Energy (CNP), PG&E Corp. (PCG), and Dominion Resources (D) are turning in some of the utilities sector's worst performances.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

The major European markets also moved to the downside over the course of the session. While the German DAX Index slid by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both dropped by 0.4 percent.

In the bond market, treasuries are moving notably lower, extending the sharp pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.4 basis points at 2.266 percent.