RTTNews - Following a modestly higher open, stocks are turning in a lackluster performance in mid-morning trading on Tuesday despite some encouraging economic reports. The major averages are just above the unchanged line, showing a lack of conviction amid another low volume session.

Before the start of trading, a report from the Commerce Department showed that housing starts rose 17.2 percent to an annual rate of 532,000 units in May from the revised April estimate of 454,000. Economists had expected starts to rise to 485,000 from the 458,000 originally reported for the previous month.

While single-family starts showed a notable 7.5 percent increase in May, the jump in housing starts was due in large part to a 77.1 percent increase in buildings with five units or more.

Separately, the Labor Department revealed that producer prices rose 0.2 percent in May. This followed a 0.3 percent increase for April and came in below economist estimates of a 0.6 percent increase.

Core producer prices, which leave out the impact of volatile food and energy prices, edged down by 0.1 percent for May. In April, the figure was up by 0.1 percent.

Meanwhile, the Federal Reserve revealed that industrial production fell by 1.1 percent in May following a revised 0.7 percent decrease in April. Economists had been expecting production to fall 1.0 percent compared to the 0.5 percent drop originally reported for the previous month.

The report also showed that capacity utilization fell to 68.3 percent in May from a revised 69.0 percent in the previous month. The capacity utilization rate had been expected to slip to 68.4 percent from the 69.1 percent originally reported for April.

In corporate news, Best Buy (BBY) reported adjusted first quarter earnings of $0.42 per share compared to $0.43 per share last year. Wall Street analysts expected the firm to report earnings of $0.34 per share.

While the consumer electronics retailer reported better than expected first quarter earnings, it reaffirmed its full year earnings guidance. Subsequently, shares of Best Buy are down 5.3 percent on the news.

On the other hand, shares of La-Z-Boy (LZB) are up 20.3 percent after the furniture maker reported fourth quarter earnings of $0.10 per share compared to a loss of $0.09 per share in the same quarter last year. The earnings surprised analysts, who had expected the firm to post a loss of $0.11 per share.

The major averages have moved to the upside in the past few minutes and are currently posting moderate gains. The Dow is currently up 16.48 at 8,628.61, the Nasdaq is up 11.02 at 1,827.40 and the S&P 500 is up 2.81 at 926.53.

Sector News

Most of the major sector indices are trading in positive territory in mid-morning trading, although only a few are showing notable upward moves.

Gold stocks are posting particularly strong gains on the day, with the NYSE Arca Gold Bugs Index rising by 2.7 percent after ending the previous session at its worst closing level in over a month. The rebound comes as the price of gold has risen by $7.40 to $934.90 per ounce.

Health insurance stocks are also seeing notable gains, as reflected by the 3.9 percent advance being shown by the Morgan Stanley Healthcare Payor Index. With the gain, the index has moved well off the six-week closing low set on Monday.

Additional strength is also visible among airline and railroad stocks, with the NYSE Arca Airline Index and the Dow Jones Railroads Index up by 3.1 percent and 2.1 percent, respectively. The move comes after transportation stocks took a beating in the previous session.

On the other hand, banking stocks are moving to the downside, with the Kbw Bank Sector Index falling by 1 percent on the day. Despite the notable retreat, the index remains in a five-week trading range.

Stocks Driven By Analyst Comments

Shares of auto parts supplier Tenneco (TEN) are on the rise after the firm was upgraded by JP Morgan Chase to Overweight from Neutral based on an expected rebound in auto production. Tenneco is up by 8.2 percent in mid-morning dealing, reaching its best intra-day level in over eight months.

Cogent Communications (CCOI) is also climbing following Citigroup's upgrade to Buy from Hold. The firm's stock is up by 9.5 percent after reaching its best intraday price in six weeks earlier in the session.

Meanwhile, Ashford Hospitality Trust (AHT) is falling after Robert W. Baird lowered its rating on the stock to Underperform from Neutral. Shares of the commercial real estate investment firm are down by 19.2 percent, falling to their worst intraday level in over five weeks.

Other Markets

In overseas trading, stock markets across the Asia Pacific region ended Tuesday's trading on the downside. Japan's benchmark Nikkei 225 Index closed down by 2.9 percent and Hong Kong's Hang Seng finished down by 1.8 percent.

Meanwhile, the major European markets are modestly higher, with the French CAC 40 Index and the German DAX Index both rising by 0.1 percent, while the U.K.'s FTSE 100 Index is up by 0.3 percent.

In the bond markets, treasuries are seeing some weakness after turning in a strong performance in the previous session. Subsequently, the yield on the benchmark ten-year note is up to 3.743 percent, a climb of 3.0 basis points on the day.

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