Stocks stayed in negative territory in early afternoon trading Tuesday but continued to whittle away at the losses.

The Nasdaq was down 0.6%, holding steady after being down 0.9% near the open. The S&P 500 fell 0.4% and the Dow industrials eased 0.5%. Volume trailed lower on both exchanges after being higher at the start.

The major indexes slipped at the open following news that February housing starts eased to a seasonally adjusted annual rate of 698,000, 2,000 shy of the consensus forecast. But construction permits beat views at 717,000 vs. 700,000.

Also, news that China is going to raise prices on gasoline and diesel for the second time in a month depressed shares in the oil patch. Oil machinery, oil drilling and international exploration stocks were among the worst performers, each down 2% or more.

Solar, steel alloy and shipping companies also fell hard.

Apple (AAPL) shaved its early 5% loss to less than 1%, a day after announcing plans to begin paying a quarterly dividend and buy back stock later in the year.

Banking stocks defied the decline, and a number of banking groups continued to climb up IBD's rankings of 197 industries.

Banks-Midwest is ranked 27th as of Tuesday's IBD, while Banks-West & Southwest is among the top 10 at No. 9.

Money center and investment banks also continued to climb after positive stress-test results last week. JPMorgan Chase (JPM) edged nearly 1% higher, while Goldman Sachs (GS) rose 2%.

Jewelry, department-store and office-supply stocks were also bucking the market's pullback, with each up 1% or more as a group.

Tiffany (TIF) bolted 7% in volume that was running five times its 50-day average. Earnings in the January fourth quarter slipped 3% to $1.39 a share, the first year-over-year decline in nine quarters.

Sales at the luxury jewelry chain rose 8%, the smallest increase in years. The stock has been working on a new cup base since November.

Construction-related stocks were among the hardest hit on concerns over China's slowing growth. Earlier, mining giant BHP Billiton (BHP) warned that China's demand for iron ore is slowing. The stock is down 3% in above-average trade.

Caterpillar (CAT) gapped down and lost 2%. But it trimmed losses after finding support near its 50-day moving average. Despite this, Caterpillar is still just 3% below a 114.75 buy point from a deep cup-with-handle base.

Joy Global (JOY) tumbled 4% to a near three-month low. It's also 26% off its 52-week peak.