By Anora Mahmudova and Carla Mozee, MarketWatch

Morgan Stanley disappoints; Delta and Halliburton top estimates

NEW YORK (MarketWatch) -- U.S. stocks trimmed losses but remained under pressure Tuesday, weighed down by escalating nervousness over deflationary pressures that have sent investors flocking to haven assets such as gold and government bonds.

A renewed slide in oil prices led to pressure on stocks, with investors increasingly skeptical about the ability of central banks to combat deflationary forces.

The European Central Bank is widely expected to announce a government-bond-buying program on Thursday; however, the program's scope may disappoint investors.

U.S. markets were closed on Monday in observance of the Martin Luther King Jr. holiday.

The S&P 500 (SPX) declined 3.58 points, or 0.2%, to trade at 2,015.84.

The Dow Jones Industrial Average (DJI) saw a triple-digit fall, but trimmed losses in earlyh afternoon activity to change hands at 17,443.40, a loss of 68.11 points, or 0.4%. Johnson & Johnson was the top decliner among the blue chips, falling nearly 3.4%.

The Nasdaq Composite (RIXF) erased a loss to trade at 4,635.97, reflecting a gain of less than 0.1%.

Ten-year Treasurys rallied, sending the yield down more than five basis points to 1.784%. The yield on the benchmark debt has steadily declined over the past 12 months.

"The big elephant in the room is deflation, and many portfolio managers are beginning to adjust their models to work in a low-interest-rate environment," said Marty Leclerc, chief investment officer of Barrack Yard Advisors. "That adjustment period spells volatility."

Leclerc stressed that in the short term the environment will be favorable for stocks, as investors may justify higher price-to-earnings ratios when real interest rates are at zero.

Peter Cardillo, chief market economist at Rockwell Global Capital, said the day's action is all about the fear of a global economic slowdown. "We are in the midst of earnings, and markets are not reacting to positive results, and the culprit is concern about Asia and Europe," he said. "The bond market is afraid of deflation, which is why we are seeing such low yields on long-dated Treasurys."

In economic news, a gauge of confidence among home builders ticked down this month by one point to 57, staying close to the highest level since late 2005, according to National Association of Home Builders/Wells Fargo data released Tuesday morning. Readings above 50 signal that builders, generally, are optimistic about sales trends.

Home-builder stocks were down sharply. PulteGoup Inc. (PHM), and D.R. Horton Inc. (DHI) both fell more than 4%.

Stock futures had been climbing after better-than-expected economic data from China, whose gross domestic product expanded 7.4% last year, beating market expectations of 7.2%. Still, that marked the slowest rate of growth since 1990 for the world's second-largest economy. Meanwhile, European equities traded near seven-year highs ahead of an expected unleashing of a sovereign-bond-buying plan by the European Central Bank when policy makers meet Thursday.

Earnings results: Morgan Stanley's (MS)quarterly results missed analyst expectations, and shares fell.

Delta Air Lines Inc. shares (DAL) jumped after the company beat estimates,reporting fourth-quarter revenue of $8.24 billion, up 4.6%.

Shares of Halliburton Co.(HAL) edged higher after the company reported better-than-expected results but warned that 2015 could be a challenging year for the oil-field servicing company, which is planning to acquire Baker Hughes Inc. (BHI)

Consumer-products heavyweight Johnson & Johnson (JNJ) beat profit expectations, but sales fell shy of estimates.

SAP SE (SAP) dropped its midterm profit-margin forecast and reported a 1% decline in fourth-quarter profit, hurt by its shift to cloud-based products.

Google Inc. (GOOG) is close to investing about $1 billion in Space Exploration Technology Corp. to support its effort to deliver Internet access via satellites, according to the Wall Street Journal. Space X is backed by Tesla Motors Inc. (TSLA) chief Elon Musk.

Twitter Inc.(TWTR) in a blog post Tuesday said it's buying India-based mobile-marketing company ZipDial for an undisclosed sum.

DreamWorks Animation SKG Inc.(DWA) last week started letting workers go, the Wall Street Journal reported.

Other markets: Chinese stocks rose nearly 2% after Monday's selloff and Japan's Nikkei Average closed 2.1% higher, its strongest percentage gain in a month.

Gold futures (GCG5) were up more than 1%. Oil futures (CLH5) fell more than 4%, trading at about $47 a barrel.

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