RTTNews - After a modest move to the upside early on, stocks have been able to build on their gains and are seeing notable strength in early afternoon trading on Tuesday. The move comes as traders have largely focused on encouraging earnings news, shrugging off the day's disappointing economic data. The major averages are all in positive territory, partly offsetting the losses posted in the previous two sessions.

Trader sentiment was boosted early on by a string of positive earning reports, with Home Depot (HD), Saks (SKS) and Target (TGT) all exceeding Wall Street estimates on the bottom line, although revenues fell short of estimates, continuing the trend of the current earnings season. After the closing bell today, Analog Devices (ADI) and Hewlett-Packard (HPQ) will release their quarterly results.

Nonetheless, some traders may be reluctant to buy stocks following the release of a report from the Commerce Department showing an unexpected decrease in housing starts in the month of July.

Also on the economic front, the Labor Department said that producer prices fell by a much more substantial margin than originally expected. Core prices also edged lower, while economists had expected the figure to tick higher.

The major averages have moved off their best levels of the day in recent trading, although they remain firmly in positive territory. The Dow is currently up 72.40 at 9,207.74, the Nasdaq is up 20.78 at 1,951.62 and the S&P 500 is up 9.03 at 988.76.

Sector News

Steel and networking stocks are continuing their strong outings in early afternoon trading, with the NYSE Arca Steel Index and the NYSE Arca Networking Index posting gains of 2.7 percent and 2.2 percent, respectively. The day's gains are helping the indices make up lost ground.

Significant strength is also visible among brokerage stocks, with the NYSE Arca Broker/Dealer Index rising by 1.9 percent. The index is regaining some ground after falling by 5.4 percent over the course of the two previous sessions.

Shares of Goldman Sachs are seeing notable strength, with the financial services giant currently up 2.2 percent after ending Monday's trading at a one-month closing low. The gain by Goldman Sachs comes after Pali Research upgraded its rating on the company's stock to Buy from Neutral

Gold, housing, transportation and semiconductor stocks are also moving notably higher along with most of the other major sectors, reflecting the day's broad based strength.

Meanwhile, modest weakness remains visible in the health insurance sector, as the White House has sought to reassure supporters that it is still pushing for a public option as part of health care reform. Over the weekend, comments from some administration officials suggested that President Obama was giving up on including a public option.

Stocks In The News

Agilent Technologies (A) is advancing after reporting third quarter earnings of $0.15 per share, which topped the consensus estimate of $0.11. The firm also raised its fourth quarter earnings guidance to $0.20 to $0.25 per share, compared to the consensus estimate of $0.20. The stock has shot up by 8.9 percent, breaking out of a 2-week range to reach at a ten-month intraday high.

Target is also on the rise after the company reported second quarter earnings of $0.79 per share, exceeding the Wall Street estimates of $0.66 per share. Shares of the discount retailer are up by 7.3 percent, poised to end the session at a ten and a half month closing high.

On the other hand, TJX Companies (TJX) is retreating after the company issued fourth quarter earnings guidance below analyst forecasts. The stock is down by 4.2 percent, setting a one-month intraday low earlier in the session.

In Focus: Earnings & Economic News

As mentioned above, Home Depot reported adjusted second-quarter net income of $0.64, beating Wall Street estimates of $0.59 per share for the quarter. The home improvement retailer also raised its full year guidance.

Further, Saks posted a second quarter net loss of $0.39 per share, while analysts had forecast a loss of $0.52 per share. Meanwhile, revenues came in at $561.70 million, which fell short of the expected $562.98 million for the quarter.

Meanwhile, data from the Commerce Department showed that housing starts fell 1.0 percent to an annual rate of 581,000 in July from the revised June estimate of 587,000. Economists had expected starts to rise to 598,000 from the 582,000 originally reported in the previous month.

In a separate report, the Labor Department revealed that producer prices dropped 0.9 percent in July following a 1.8 percent increase in the previous month. Economists had expected the measure to slip 0.3 percent for the month.

Core prices, which exclude the volatile food and energy sectors, ticked down 0.1 percent in July. Economists were looking for core prices to edge up by 0.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished on a mixed note Tuesday. Japan's benchmark Nikkei 225 Index rose by 0.2 percent, while Australia's All Ordinaries Index fell 0.3 percent.

Meanwhile, the major European markets all ended the day higher, with the French CAC 40 Index and the U.K.'s FTSE 100 Index rising by 0.6 percent and 0.5 percent, respectively, while the German DAX Index finished up by 0.7 percent.

In the bond markets, treasuries are seeing some weakness amid the strength visible on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.509 percent, posting a gain of 1.8 basis points.

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