Stocks Give Back Ground Following Yesterday's Rally - U.S. Commentary

(RTTNews) - Stocks have moved moderately lower in early trading on Tuesday, partly offsetting the strong gains posted in the previous session. The major averages have slid into negative territory but remain well off their recent lows.

In recent trading, the major averages have climbed off their lows for the young session, but they remain in the red. The Dow is down 76.97 points or 0.4 percent at 17,899.34, the Nasdaq is down 17.61 points or 0.4 percent at 4,929.83 and the S&P 500 is down 6.40 points or 0.3 percent at 2,079.84.

The early weakness on Wall Street is partly due to profit taking following yesterday's rally, with stocks extending the volatility seen in recent weeks.

Renewed worries about the outlook for interest rates are also weighing on the markets following remarks by Richmond Federal Reserve Bank President Jeffrey Lacker.

In a speech to the Greater Richmond Chamber of Commerce, Lacker said he believes a strong case can be made for an increase in interest rates relatively soon.

Lacker said the Fed's June meeting will likely be an appropriate time to raise rates, arguing that recent signs of economic weakness are transitory and due to the rough winter weather.

While Lacker is widely viewed as the one of the most hawkish Fed officials, his comments have offset some of the recent dovish signs from the Fed.

Traders are also digesting a mixed batch of economic data, including a report from MNI Indicators showing that Chicago business activity continued to contract in March.

MNI Indicators said its Chicago business barometer edged up to 46.3 in March from 45.8 in February, although a reading below 50 continues to indicate a contraction.

Economists had expected the business barometer to show a more significant rebound to a reading of 51.5, which would have indicated modest growth.

Meanwhile, the Conference Board released a separate report showing an unexpected rebound in consumer confidence in the month of March.

The Conference Board said its consumer confidence index jumped to 101.3 in March from an upwardly revised 98.8 in February.

The increase came as a surprise to economists, who had expected the index to edge down to 95.5 from the 96.4 originally reported for the previous month.

Nonetheless, steel stocks have shown a significant move to the downside in early trading, dragging the NYSE Arca Steel Index down by 1.7 percent. The index is lingering near its lowest levels in nearly six years.

Computer hardware, tobacco, and airline stocks are also seeing early weakness, although most of the major sectors are showing only modest moves.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index slumped by 1.1 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets have all come under pressure on the day. While the U.K.'s FTSE 100 Index has tumbled by 1.4 percent, the German DAX Index and the French CAC 40 Index are down by 0.8 percent and 0.7 percent, respectively.

In the bond market, treasuries are seeing modest strength after ending the previous session slightly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 1.944 percent.