RTTNews - Following a considerable rally in the previous session, stocks are turning in a lackluster performance in early trading on Tuesday. The major averages are currently up after an early slide.

The move has come despite disappointing data from the housing sector which deflated trader confidence earlier.

Data from the U.S. Commerce Department showed housing starts dropped 12.8 percent in April to an annual rate of 458,000 units. The result for March was revised to a rate of 525,000 units, a decline of 8.5 percent from the previous month.

Analysts had expected starts to rise to a pace of 540,000 units from the rate of 510,000 units that was originally reported for March. Meanwhile, building permits, a measure of future home construction, were also down, dropping 3.3 percent to an annual rate of 494,000 units.

On the earnings front, Home Depot (HD) reported better-than-expected first quarter results after rival Lowe's (LOW) also reported profits which edged out estimates the previous day.

Home Depot reported net earnings for the quarter at $587 million or $0.35 per share, compared to adjusted net earnings of $697 million or $0.41 per share for the same quarter in 2008. The results beat Wall Street expectations of $0.29 per share.

Meanwhile, Medtronic, Inc. (MDT) reported fourth quarter net earnings of $250 million or $0.22 per share, compared to $812 million or $0.72 per share in the year ago quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $0.82 per share on revenues of $3.84 billion for the quarter.

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) have reportedly filed 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. American Express Co. (AXP), which received $3.4 billion, is also said to have filed for returning the funds last week.

American Express also announced Monday a series of cost cutting measures, including 4,000 job cuts, expected to produce cost benefits of about $800 million during the remainder of 2009.

Meanwhile, HSBC Holdings Plc (HBC, HSBA.L) and Bank of East Asia Ltd. reportedly received the approval of the Chinese government to issue yuan-denominated bonds in Hong Kong. The Chinese government's move is seen as part of its efforts to encourage the use of yuan as a reserve currency and reduce the role of the U.S. dollar.

This afternoon, traders will look to an announcement from the Obama White House regarding a new set of automobile emissions standards. President Barack Obama is reportedly expected announce a change to federal rules allow states such as California to enact stricter emissions standards than those set by the federal government.

The major averages are posting have moved off of their highs on the day, but remain in positive territory. The Dow is currently up 18.87 at 8,522.95, the Nasdaq is up 4.86 at 1737.22, and the S&P 500 is up 3.95 at 913.66.

Sector News

Reflecting the turnaround on the day, a number of major sectors have begun to show considerable gains on the day.

Significant strength has emerged among steel stocks, with gains visible in the Amex Steel Index, up by 4.5 percent on the day. With the advance, the sector index looks to challenge its high of the year posted early last week.

Also contributing to the upward move on the day are healthcare provider stocks, as reflected by the 4.2 percent gain currently being shown by the Morgan Stanley Healthcare Provider Index. The index is moving further off the 3-week closing low it set on Friday.

On the other hand, tobacco stocks are pulling back, dragging the Amex Tobacco Sector Index down by 1.6 percent. With the decline, the index is pulling back off of its high for the year set in the previous session.

Further limiting some of the day's gains are losses in the healthcare, real estate and housing stocks.

Stocks Driven By Analyst Comments

Despite the broad based gains on the day, American Apparel (APP) is falling in mid-morning trading after being downgraded from Buy to Hold by Lazard Capital Markets. The downgrade came as the firm recently cut its fully year revenue forecast. The stock has plunged to its lowest level since late April, dropping by 20.0 percent on the day.

Shares of eHealth (EHTH) are also seeing considerable downside following a downgrade to Underperform from Perform by Oppenheimer Funds. The stock has fallen 9.1 percent, returning to levels posted in late last month.

On the other hand, shares of Gildan Activewear (GIL) are considerably higher in light of an upgrade by UBS. The stock's rating was raised to Buy from Neutral, prompting the 8.7 percent surge on the day. With the climb, shares have reached their highest level since early December.

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 are also turning in a modestly strong performance. The French CAC 40 Index is up 0.9 percent, while the German DAX Index is also up, rising by 2.9 percent. The U.K.'s FTSE 100 Index is also gaining, up by 0.8 percent.

In the bond markets, treasuries are seeing considerable weakness on the day. Subsequently, the yield on the benchmark ten-year note is up 5.1 basis points at 3.262 percent.

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