Stocks Seeing Modest Weakness In Early Trading - U.S. Commentary

(RTTNews) - Stocks are seeing modest weakness in early trading on Tuesday, partly offsetting the gains posted in the previous session. The major averages are all in negative territory, although selling pressure has remained relatively subdued.

Currently, the major averages are posting slim losses on the day. The Dow is down 9.45 points or 0.1 percent at 17,535.73, the Nasdaq is down 17.00 points or 0.3 percent at 5,074.70 and the S&P 500 is down 1.89 points or 0.1 percent at 2,100.55.

The early weakness on Wall Street partly reflects a negative reaction to earnings news from Wal-Mart (WMT), with the retail giant falling by 3.1 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 as 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.

Electronic storage stocks are seeing significant weakness in early trading, resulting in a 1.5 percent drop by the NYSE Arca Disk Drive Index. The index is currently on pace to end the session at a two-year closing low.

Semiconductor, airline, and metal stocks have also shown notable moves to the downside, while considerable strength has emerged among housing stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. 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 have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.4 percent, the French CAC 40 Index and the German DAX Index are both down by 0.3 percent.

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 3.7 basis points at 2.187 percent.