As investors react to mixed economic and corporate news, stocks are showing notable uncertainty in mid-morning trading on Thursday. Earnings from Apple (AAPL) and UPS (UPS) are driving trading from the corporate end, while jobless claims and existing home sales are moving the markets on the economic front.
After the close of trading on Wednesday, Apple reported net income for the second quarter of $1.33 per share, compared to $1.16 per share for the year-ago quarter. Revenue for the second quarter rose to $8.16 billion from $7.51 billion in the prior year quarter.
Analysts' consensus estimates had called for Apple to earn $1.09 per share on revenue of $7.96 billion for the second quarter. The better than expected results were primarily due to strong iPhone sales.
Meanwhile, UPS reported adjusted first quarter earnings of $0.52 per share, down from $0.87 per share last year and $0.04 below analyst estimates. Revenue also dropped, falling nearly 14 percent to $10.94 billion. That also failed to meet analysts' target.
In economic news, a report released by the Labor Department showed that first-time claims for unemployment benefits climbed roughly in line with economist estimates in the week ended April 18th. Unfortunately, the report also showed another record number of continuing claims.
Initial jobless claims rose to 640,000 from the previous week's revised figure of 613,000. Economists had expected jobless claims to rise to 639,000 from the 610,000 originally reported for the previous week.
At the same time, the Labor Department said that continuing claims in the week ended April 11th rose to a record high of 6.14 million from the preceding week's revised level of 6.04 million.
Meanwhile, the National Association of Realtors released its report on existing home sales in the month of March, showing that the annual rate of sales fell 3.0 percent to 4.57 million. Economists had expected existing home sales to slip to a 4.65 million unit rate.
While sales fell by more than expected, Lawrence Yun, NAR chief economist, suggested that the market appears to be stabilizing with modest monthly ups and downs. Yum added that first-time buyers are driving the market.
In other news, a Wall Street Journal report said that Bank of America (BAC) CEO Ken Lewis testified that he was asked by government officials not to discuss the plan to buy embattled Merrill Lynch & Co. (MER).
The report noted that Lewis believed former Treasury Secretary Henry Paulson and Federal Reserve Chairman Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which Bank of America acquired in January.
The major averages have been unable to sustain any significant moves in morning trading and are currently mixed. While the Dow is down 3.98 at 7,882.59, the Nasdaq is up 1.33 at 1,647.45 and the S&P 500 is up 0.81 at 844.36.
While many of the major sectors are showing a lack of direction along with the broader markets, electronic storage stocks are seeing notable weakness, dragging the Amex Disk Drive Index down 1.7 percent. The loss by the index comes after it ended Wednesday at a three-month closing high.
Within the storage sector, Adaptec (ADPT) is posting one of the widest losses, falling 2.8 percent. With the loss, shares of Adaptec are pulling back further off the nearly three-month closing high set on Tuesday.
Health insurance, oil service, and biotechnology stocks are also suffering notable losses. The Morgan Stanley Healthcare Payor Index is down 2.9 percent, while the Philadelphia Oil Service Index and the Amex Biotechnology Index are both down 1.5 percent.
At the other end of the spectrum, gold stocks are seeing considerable strength amid a notable increase by the price of the precious metal. With gold for June delivery currently up $14 at $906.50 an ounce, the Amex Gold Bugs Index is up 4.9 percent.
Railroad, banking, and real estate stocks are also posting strong gains gain, with the Dow Jones Railroads Index up 3.3 percent, while the Kbw Bank Index and the Morgan Stanley REIT Index are posting gains of 1.7 percent and 1.5 percent, respectively.
Stocks Driven By Analyst Comments
Packaging Corp of America (PKG) is suffering a 2.5 percent loss following a downgrade at Goldman Sachs to Neutral from Buy. With the decline, the stock has pulled back well off the over five-month closing high it set in the previous session.
The downgrade came as analysts believe that shares of the company are discounting mid-cycle valuation and are now showing limited upside potential.
Additionally, Citrix Systems, Inc. (CTXS) is down 3.9 percent after being downgraded to Sell from Neutral at UBS. The stock's price target was also lowered to $22.50 from $25.00.
Meanwhile, OmniVision (OVTI) is showing a gain of 10.70 percent following an upgrade to Overweight from Neutral at JP Morgan.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Thursday after ending the previous session mixed. Japan's benchmark Nikkei 225 Index showed a strong upward move, closing up 1.4 percent.
Meanwhile, the major European markets are showing some uncertainty and are currently mixed. While the German DAX Index is down 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both up 0.2 percent.
In the bond market, treasuries have shown a lack of direction along with the U.S. stock markets, with the benchmark 10-year note bouncing back and forth across the unchanged line. The yield on the 10-year note is currently up 1.3 basis points at 2.977 percent.
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