U.S. Stocks Turn Positive After Seeing Initial Weakness

After coming under pressure early in the session, stocks have shown a significant turnaround over the course of morning trading on Tuesday. The major averages have climbed well off their worst levels of the day and into positive territory.

In recent trading, the major averages have pulled back off their best levels but currently remain positive. The Dow is up 109.21 points or 0.5 percent at 22,436.69, the Nasdaq is up 91.76 points or 1.2 percent at 7,865.91 and the S&P 500 is up 8.68 points or 0.3 percent at 2,635.33.

The turnaround on Wall Street comes as separate reports on consumer confidence and Chicago-area business activity showed deteriorations in March but still came in well above economist estimates.

A report from the Conference Board showed its consumer confidence index slumped to 120.0 in March from an upwardly revised 132.6 in February.

However, economists had expected the consumer confidence index to tumble to 110.0 from the 130.7 originally reported for the previous month.

MNI Indicators released a separate report showing its Chicago business barometer fell to 47.8 in March from 49.0 in February, with a reading below 50 indicating a contraction in regional business activity.

The Chicago business barometer remained below 50 for the ninth straight month but showed a relatively modest decrease compared to economist estimates for a slump to 40.0.

The better than expected data has offset some of the concerns about the economic impact of the ongoing coronavirus pandemic.

A report showing an unexpected expansion in Chinese manufacturing activity in the month of March has also helped to alleviate the worries.

The latest survey from the National Bureau of Statistics showed China’s purchasing managers index jumped to 52.0 in March from 35.7 in February, with a reading above 50 indicting an expansion.

Economists had expected the index to climb to 45.0, although a reading below 50 would have indicated a continued contraction in Chinese manufacturing activity.

Positive sentiment may also have been generated in reaction to Dr. Anthony Fauci telling CNN he is starting to see “glimmers” that social distancing is helping to stop the spread of the coronavirus in the U.S.

Energy stocks have moved sharply higher in morning trading, with a rebound by the price of crude oil contributing to the strength in the sector. Crude for May delivery is climbing $0.48 to $20.57 a barrel, bouncing off an eighteen-year closing low.

Reflecting the strength in the energy sector, the Philadelphia Oil Service and the NYSE Arca Oil Index are spiking by 4.4 percent and 4.8 percent, respectively.

Significant strength has also emerged among tobacco stocks, as reflected by the 2.4 percent jump by the NYSE Arca Tobacco Index.

The strength in the tobacco sector comes after British American Tobacco (BTI) and rival British cigarette maker Imperial Brands both said they have not seen a material impact on their business from the coronavirus outbreak.

Software, steel and semiconductor stocks have also moved to the upside on the day, while notable weakness remains visible among interest rate-sensitive commercial real estate, housing and utilities stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while Hong Kong’s Hang Seng Index surged up by 1.9 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index is up by 0.1 percent, the German DAX Index is up by 0.7 percent and the U.K.’s FTSE 100 Index is up by 1 percent.

In the bond market, treasuries are giving back ground after moving notably higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.1 basis points at 0.681 percent.

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