RTTNews - Stocks are showing a lack of conviction in afternoon trading on Tuesday, bouncing in and out of positive territory. The major averages are currently holding on to thin gains, despite disappointing data on housing starts.

Equities have been unable to sustain any major moves on the day. Trading volume has been considerably subdued in today's session.

Earlier, traders considered a report from the U.S. Commerce Department showing a decline in housing starts of 12.8 percent in April to an annual rate of 458,000 units. The result for the previous month was revised to a rate of 525,000 units, a dip of 8.5 percent from February.

Economists had forecasted the starts figure to rise to a pace of 540,000 units from the rate of 510,000 units that was originally reported for March. The report showed that building permits were also down, slipping by 3.3 percent to an annual rate of 494,000 units.

Traders are also digesting President Barack Obama's plan to relieve the dependence of the United States on foreign oil by announcing a federal standard on auto emissions. The new standard was announced in agreement with the nation's leading car industry CEOs.

On the earnings front, Home Depot (HD) reported first quarter results that edged out estimates following rival Lowe's (LOW) Monday report that also beat earnings forecasts. Home Depot reported earnings for the quarter at $587 million or $0.35 per share after Wall Street analysts forecast earnings of $0.29 per share.

Meanwhile, Medtronic (MDT), the world's largest medical technology firm, reported fourth quarter earnings $0.22 per share. The results fell well short of analyst expectations, which estimated earnings at $0.82 per share. Shares of Medtronic suffered on the news, showing a decline of 7.9 percent heading into mid-afternoon trading.

In other news, three major banks intend to apply to repay funds borrowed under the government's TARP program, fueling speculation that the worst in the financial crisis might be nearing an end.

Financial service providers Goldman Sachs Group (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) aim to repay the bail-out funds received under the TARP program in October. The three firms have received a total of about $45 billion in funds. The government is expected to announce the results of the filings June 8th.

The major averages have moved essentially sideways in recent trading. The Dow is currently up 17.28 at 8,521.36, the Nasdaq is up 5.93 at 1738.29, and the S&P 500 is up 3.30 at 913.01.

Sector News

A number of major sectors continue to show gains in afternoon trading, contributing to the modest upward move by the major averages on the day.

Contributing to the upward move on the day are healthcare provider stocks, as reflected by the 5.5 percent gain currently being shown by the Morgan Stanley Healthcare Provider Index. With the climb, the index is moving further off of the 3-week closing low it set on Friday.

Significant strength has continued among steel stocks, with the Amex Steel Index climbing by 5.1 percent on the day. With the advance, the sector index continues to climb towards its best level of the year, reached earlier this month.

On the other hand, tobacco stocks are continuing their retreat, pulling the Amex Tobacco Sector Index down by 1.4 percent. Further limiting some of the day's gains are losses in the healthcare, real estate and housing stocks.

Stocks in the News

Shares of Sprint Nextel (S) are seeing considerable gains as the firm announced it will launch Palm's (PALM) Pre Smartphone device on June 6th. The original selling price is set to match Apple's (AAPL) iPhone price of $199.99. Shares of Sprint Nextel are up by 2.6 percent on the day, reaching their highest level of the year, and posting their highest intraday level in 7 months.

As traders reacted to the news, shares of Palm have moved off of their best level of the year posted in the previous session. Monday's closing price of $12.06 was also the highest for the stock since October of 2007.

Meanwhile, shares of MSCI (MXB) have slipped 9.2 percent on the day as Morgan Stanley (MS) announced that it is selling its stake in the company for $21.50 per share. Morgan Stanley will sell 27.7 million shares of the firm, aiming to raise $595.7 million. The news has prompted steep losses in shares of MSCI, which has now given back all of May's gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished higher on Tuesday. Japan's benchmark Nikkei 225 Index rose by 2.7 percent, while Hong Kong's Hang Seng Index climbed 3.0 percent.

Meanwhile, the major European markets turned in largely modest gains on the day. The French CAC 40 Index closed up 0.9 percent, while the German DAX Index also rose, finishing up by 2.2 percent. Meanwhile, the U.K.'s FTSE 100 Index also gained on the day, closing up by 0.8 percent.

In the bond markets, treasuries have moved off of their worst levels of the day, but remain in firmly negative territory. Subsequently, the yield on the benchmark ten-year note is up 2.6 basis points at 3.237 percent.

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