Modest Weakness Remains Visible On Wall Street - U.S. Commentary

(RTTNews) - While selling pressure has remained relatively subdued, stocks continue to see modest weakness in mid-day trading on Tuesday. The pullback on the day has partly offset the upward move that was seen over the course of the previous session.

The major averages currently remain in the red but off their worst levels of the day. The Dow is down 16.80 points or 0.1 percent at 17,528.38, the Nasdaq is down 15.58 points or 0.3 percent at 5,076.12 and the S&P 500 is down 3.97 points or 0.2 percent at 2,098.47.

The weakness on Wall Street partly reflects a negative reaction to earnings news from Wal-Mart (WMT), with the retail giant falling by 2.9 percent.

The drop by shares of Wal-Mart comes after the company reported weaker than expected second quarter earnings and lowered its full-year guidance.

Worries about the situation in China are also weighing on the markets following a sell-off by stocks in the communist nation.

China's Shanghai Composite Index plunged 6.2 percent on the day amid concerns about economic growth. The steep drop came even as the People's Bank of China set the mid-point of the dollar-yuan exchange rate slightly higher.

On the U.S. economic front, the Commerce Department released a report showing that housing starts edged up to a nearly eight-year high in July, although the report also showed a sharp drop in building permits.

The report said housing starts inched up by 0.2 percent to an annual rate of 1.206 million in July from the revised June estimate of 1.204 million.

With the modest increase, housing starts rose to their highest annual rate since reaching 1.264 million in October of 2007.

Meanwhile, the report said building permits, an indicator of future housing demand, plunged 16.3 percent to an annual rate of 1.119 million in July after jumping to an eight-year high of 1.337 million in June.

Sector News

Airline stocks have come under considerable selling pressure over the course of the trading day, dragging the NYSE Arca Airline Index down by 1.7 percent. The index has more than offset the 1.3 percent gain posted on Monday.

China Southern Airlines (ZNH) has helped to lead the sector back to the downside, plummeting by 8.8 percent on the day.

Significant weakness also remains visible among electronic storage stocks, as reflected by the 1.5 percent loss being posted by the NYSE Arca Disk Drive Index. The index remains on pace to end the session at a two-year closing low.

Steel, semiconductor and gold stocks have also moved notably lower on the day, while housing stocks have moved higher on the heels of the upbeat housing starts data.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday amid the sell-off in China. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index tumbled by 1.4 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.4 percent, the French CAC 40 Index and the German DAX Index edged down by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries have come under pressure, partly offsetting the strength seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.5 basis points at 2.185 percent.