U.S. MARKET AVERAGES

U.S. stocks traded in the negative territory, reflecting profit taking after the Dow’s Monday close at four-and-a-half-years peak of 11,011 and disappointing earnings reports from major companies like Alcoa, Phelps Dodge and Guidant Corp. A brokerage downgrade of blue-chip United Technologies Corp and rising crude oil prices also contributed to the investors' cautiosness in trading.

After the closing bell Monday Alcoa Inc, the world's biggest aluminum producer, kicked off the fourth-quarter earnings season. The company’s quarterly results disappointed and the stock slipped 4.7% in Frankfurt trade after it reported a 16% Q4 earnings drop to 24 cents a share vs. 39 cents a year ago, missing estimates of 37 cents a share. The Dow component posted a sharply lower fourth-quarter profit due to a long list of production outages, strikes and restructuring costs.

Copper producer, Phelps Dodge cut its Q4 earnings outlook from the range of $4.15 to $4.40 sharply down to the range of $1 to $1.30 a share, citing higher copper prices, production and sales decrease.

Guidant Corp. (GDT: chart), medical device manufacturer, announced that its Q4 sales would fall by 15% in comparison with the year-ago period.

Energy stocks were among the best performers of the day, though coming off their intraday peaks since the mid-morning. The disk drive sector reversed from early losses to post a modest gain.

The drug sector slipped 1% on profit taking, following a multi-year high on Monday.

Broadcom (BRCM: chart) built on the recent significant gains, extending its 52-week high. Corning (GLW: chart) and Marvell Technology (MRVL: chart) also set fresh peaks, extending highs.

Red Robin Gourmet Burgers (RRGB)) broke to a new 52-week low on lowered guidance. LifePoint (LPNT: chart) also dropped to a new low on a disappointing outlook.

The Dow Jones industrial average was down 27.50 points, or 0.25%. The Standard & Poor's 500 Index was down 3.56 points, or 0.28%. The technology-laced Nasdaq Composite Index was down 6.19 points, or 0.27%.

MOVERS AND SHAKERS

Home Depot Inc (HD: chart) agreed to buy Hughes Supply Inc., a distributor of construction, repair and maintenance products, for $3.47 billion, or $46.50 a share, assuming $285 million in debt. The stock rose 2.5%.

Bell Microproducts Inc (BELM: chart) , provider of semiconductors, computer platforms, peripherals, storage products, as well as tech services, expects to report a fourth-quarter loss of 23 cents to 30 cents a basic share. Fourth-quarter adjusted net should come in at $1.8 million to $2.7 million, or 6 cents to 9 cents a share, lower than earlier projections of 14 cents to 18 cents. Revenue was around $845 million up, 5% from $808 million. The stock dropped 11.7%.

Endo Pharmaceuticals Holdings Inc (ENDP: chart) forecast 2006 earnings of $1.75 to $1.80 a share, excluding some items, on sales of $860 million to $880 million. Analysts forecast 2006 earnings of $1.65 to $1.95 a share on sales of $820 million. The stock fell 4.4%.

ECONOMIC NEWS

The Department of Commerce released its report on wholesale inventories in the month of November on Tuesday, showing that inventories rose slightly less than economists had been expecting.

The report showed that wholesale inventories rose 0.4 percent in November following a 0.2 percent increase in October. Economists had been expecting inventories to increase by about 0.5 percent.

The increase was partly due to a 0.6 percent increase in inventories of durable goods, which reflected a 1.5 percent increase in inventories of machinery, equipment, and supplies. Inventories of non-durable goods rose 0.1 percent in November.

The report also showed that wholesale sales fell 0.7 percent in November after increasing by 0.9 percent in October. The decrease reflected a 0.5 percent drop in sales of durable goods and a 1.0 percent drop in sales of non-durable goods.

INTERNATIONAL MARKETS NEWS

Most Asian-Pacific benchmarks lost ground Tuesday, posting heavy losses on worries that recent rally may have gone too far, especially currency-rate gains with exporter issues benefiting from them. The decliners were led by The Nikkei which tumbled 1.9% to 16,124.35, followed by South Korea’s Kospi, down 0.9%, and Taiwan’s Weighted index, down 0.5%. China’s Shanghai Composite and Hong Kong’s Hang Seng reversed from recent weakness to finish higher by 0.4% each.