Significant strength remains visible on Wall Street in early afternoon trading on Tuesday, with stocks rebounding following Monday's massive losses. The major averages have all moved firmly into positive territory, although they remain well off their recent highs.

The rebound by the markets comes as some traders are using the sell-off that was seen in the previous session as a buying opportunity. Nonetheless, the release of weaker than expected economic data has helped to limit the upside for the markets.

On the economic front, Standard and Poor's released its report on home prices in the month of January before the start of trading, with the report showing continued broad based declines in the prices of existing single family homes.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index for January fell 19.0 percent compared to the same month a year ago, reflecting an acceleration from a revised 18.6 percent year-over-year decline in December.

With the acceleration, the 20-city home price index fell at its fastest annual rate on record, although year-over-year data for the index only dates back to January of 2001.

Separately, activity in the Chicago-area manufacturing sector continued to contract in the month of March, according to a report released by the Institute for Supply Management - Chicago, with the index of activity in the sector showing an unexpected decrease.

The report showed that the index of activity in the sector fell to 31.4 in March from 34.2 in February, with a reading below 50 indicating a contraction in the sector. Economists had been expecting the index to edge up to a reading of 34.3.

Meanwhile, the Conference Board's consumer confidence index edged up to 26.0 in March from a record low reading of 25.3 in February, although economists had been expecting a somewhat more significant increase by the index to a reading of 28.0.

In corporate news, defense contractor Ceradyne (CRDN) has received an approximately $77 million delivery order for XSAPI ceramic body armor plates. Ceradyne will begin shipping this XSAPI production release in the second quarter of 2009 and expects to complete the order in the fourth quarter of 2009.

Additionally, the owner of the Chicago Sun-Times, Sun-Times Media Group, Inc. (SUTM), revealed that it has filed for Chapter 11 bankruptcy protection, becoming yet another in the long line of failing newspapers.

The major averages have moved off their best levels of the day in recent trading, although they are holding onto strong gains. The Dow is currently up 79.25 at 7,601.27, the Nasdaq is up 22.97 at 1,524.77 and the S&P 500 is up 8.69 at 796.22.

Sector News

Following the broad based weakness that was seen in the previous session, most of the major sectors are moving back to the upside.

Banking stocks are turning in some of the market's best performances, driving the Kbw Bank Index up 4.9 percent on the day. With the gain, the index has partly offset the more than 10 percent loss that it posted on Monday.

Within the sector, Fifth Third Bancorp (FITB) is helping to lead the way higher, climbing 12.1 percent on the day to reach its highest level in over a month and a half.

Real estate, health insurance, and brokerage stocks are also showing considerable advances. The Morgan Stanley REIT Index and the Morgan Stanley Healthcare Payor Index are up 4.3 percent and 3.8 percent, respectively, while the Amex Securities Broker/Dealer Index is up 2.8 percent.

While steel, software, and wireless stocks are also showing noteworthy strength on the day, housing stocks are bucking the uptrend, dragging the Philadelphia Housing Index down 2.5 percent. Some tobacco, retail, and transportation stocks are also posting notable losses.

Stocks In The News

Amylin Pharmaceuticals, Inc. (AMLN) is posting a gain of 14 percent on the day following news that the new diabetes medication it has developed with Eli Lilly (LLY) and Alkermes (ALKS) has shown positive results in the DURATION-2 trial. With the advance, the stock is challenging the five-month closing high it set last Thursday.

Additionally, Textron Inc. (TXT) is up 5.2 percent after the company reaffirmed its 2009 cash outlook while announcing that it will further lower 2009 manufacturing production rates at Cessna and its Industrial business units.

At the other end of the spectrum, Ingersoll-Rand Co. Ltd. (IR) is suffering a loss of 4.2 percent after the company lowered its full year earnings and revenue guidance. Further, the company's board authorized a reduction in the quarterly common stock dividend to $0.07 per share from $0.18 per share.

Other Markets

In overseas trading, the major stocks markets in the Asia-Pacific region turned in a mixed performance on Tuesday. While Hong Kong's Hang Seng Index rose 0.9 percent, Japan's benchmark Nikkei 255 Index fell 1.5 percent.

Meanwhile, the major European markets are holding near their highs of the day, well above the unchanged line. The U.K.'s FTSE 100 Index is posting a gain of 4.3 percent, while the French CAC 40 Index and the German DAX Index are up 3.2 percent and 2.4 percent, respectively.

In the bond market, treasuries are continuing to show strength but have come off their intraday highs. Subsequently, the yield on the benchmark 10-year note is down 1.1 basis points at 2.703 percent after hitting a low of 2.679 percent.

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