RTTNews - Stocks continue to linger in negative territory in mid-afternoon trading on Tuesday, with traders doing some profit taking amid a lack of significant economic news on the day. The major averages are bouncing around in negative territory, posting notable losses.

The move comes as traders are cashing in on some recent gains, bracing for what is expected to be a dreary earnings season. Aluminum producer Alcoa (AA) is set to unofficially kick off the earnings season after the close of trading on Wednesday.

Aside from the earnings data on tap for the second half of the week, traders are also looking ahead to a series of economic reports on employment, international trade and consumer sentiment to guide trading.

Mitigating some concern over interest rates was the Treasury's auction of $35 billion worth of three-year notes. The sale drew a high-yield of 1.519 percent and attracted moderately strong demand, with the bid-to-cover ratio coming in at 2.62. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Monday, an auction of 10-year Treasury Inflation Protect Securities, or TIPS, drew a yield of 1.92 percent and a bid-to-cover ratio of 2.51, its highest in nine years.

Traders will also look the Treasury's monthly sale of standard ten-year notes on Wednesday with an offering of $19.0 billion. The results of the standard ten-year auction and the sale of TIPS notes will be closely watched by investors, who will compare the yields to gauge the prospect of near-term inflation.

The government has continued to sell bonds in record amounts to fund its accelerated stimulus spending, while recent comments from the Obama administration have led to rampant speculation regarding a second stimulus package.

The major averages have seen choppy trading in the afternoon hours, remaining firmly in negative territory. The Dow is currently down 77.16 at 8,247.71, the Nasdaq has fallen 21.38 to 1,766.02 and the S&P 500 has dipped by 8.99 to 889.73.

Dow Components

A majority of the Dow components are trading in negative territory, contributing to the decline by the blue chip index.

The Dow's sharpest pullback has come from shares of DuPont (DD), which are down by 3.8 percent. With the loss, the stock has more than offset Monday's gain.

Caterpillar (CAT) is also seeing notable downside, dropping by 2.9 percent on the day. With the move, shares of the construction equipment maker fell to their worst intraday price in well over two months earlier in the session.

Boeing (BA) and United Technologies (UTX) are also posting steep losses, falling by 2.6 percent and 2 percent, respectively. The decline has the stocks poised for their worst finishes in roughly two months.

While Verizon (VZ), Home Depot (HD) and Microsoft (MSFT) are also pulling back by considerable margins, shares of Alcoa and JP Morgan Chase (JPM) are bucking the downtrend.

Alcoa has climbed by 4.6 percent, moving off of a one-month low set in the previous session, while JP Morgan Chase is up by 2.3 percent, bouncing off its worst closing price in over two months.

Sector News

Significant weakness remains visible among housing stocks, with the Philadelphia Housing Sector Index retreating by 2.8 percent. The fall dragged the index down to its worst intraday level in three months earlier in the session.

Transportation and commercial real estate stocks are also retreating, as reflected by the 2.3 percent loss being shown by the Dow Jones Transportation Average and the 2.6 percent pullback by the Morgan Stanley REIT Index.

Electronic storage stocks are also under pressure, with the NYSE Arca Disk Drive Index falling by 2 percent. Dragging the sector lower are shares of Seagate (STX), which have fallen 5 percent. With the drop, the stock continues to back off of a nine-month closing high set in early July.

Oil service, chemical, brokerage and telecommunications stocks are also slipping, reflecting the day's broad based retreat. The losses by oil service stocks come as the price of oil continues to plunge on the NYMEX, with oil for August delivery now down $1.27 at $62.78 a barrel.

On the other hand, healthcare provider and health insurance stocks continue to show strong gains on the day. Some strength has also emerged among gold and banking stocks.

In Focus: Earnings

As mentioned above, Alcoa will report its second quarter results after the close of trading on Wednesday, with the aluminum producer expected to incur a loss of $0.34 per share on revenues of $3.94 billion. In the prior year period, the company posted earnings of $0.66 per share on revenues of $7.62 billion.

In today's earnings news, Greenbrier (GBX) reported a third-quarter loss of $50.53 million or $3.00 per share versus a profit of $8.1 million or $0.49 per share in the previous year. Excluding charges, the company earned $0.03 per share. The firm also said revenue dropped by 36 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region ended Tuesday's session mixed. Japan's benchmark Nikkei 225 Index closed down by 0.3 percent, while South Korea's KOSPI rose 0.4 percent on the day.

Meanwhile, the major European markets all closed in negative territory. The German DAX Index and French CAC 40 Index fell by 1.2 percent and 1.1 percent, respectively, while the U.K.'s FTSE 100 dipped 0.2 percent.

In the bond markets, treasuries have moved into positive territory amid the pullback on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.470 percent, a drop of 3.6 basis points on the day.

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