RTTNews - After seeing a strong start on the heels of encouraging employment data, stocks are posting significant gains in early afternoon trading on Friday. The major averages are all in positive territory by substantial margins, offsetting the losses posted in the previous two sessions.
Buying interest was generated by a report from the Labor Department released this morning showing that the pace of job losses slowed by even more than economists had been anticipating in the month of July. The unemployment rate also dipped unexpectedly.
On the earnings front, American International Group (AIG) and Fannie Mae (FNM) saw mixed reaction to their quarterly results as the firms are lingering in the shadow of receiving government bailout funds last fall.
Meanwhile, Hansen Natural Corp. (HANS), Nvidia (NVDA) and AES Corp. (AES) largely beat estimates. Generally, companies have been able to surpass expectations on the bottom line via cost cutting, as revenue growth was limited by the recent economic conditions.
The major averages have been in a holding pattern in recent dealing after reaching their best levels of the day in late morning trading. The Dow is currently up 130.82 at 9,387.08, the Nasdaq is up 30.78 at 2,003.94 and the S&P 500 is up 15.57 at 1,102.65.
Banking stocks are posting notable gains in early afternoon trading, with the Bank Index rising by 4.7 percent. The climb has lifted the index to its best intraday level in nearly eight months.
The index is being boosted by shares of Zions Bancorp, which have jumped by 11.5 percent. The stock reached its best intraday level in nearly three months earlier in the session.
Railroad and housing stocks are also building on their early gains, with the Dow Jones Railroads Index and the Philadelphia Housing Sector rising by 5.4 percent and 4.7 percent, respectively. The railroads index has risen to its best intraday level in nearly nine months, while the housing index is looking to close at its highest level in ten months.
Commercial real estate, airline, brokerage and health insurance stocks are also advancing by significant margins, reflecting the broad strength in the market.
Meanwhile, gold stocks are continuing to buck the day's uptrend along with biotechnology stocks, which are posting more modest losses. The decline by gold stocks has come as the price of the commodity has retreated on the NYMEX, falling by $3.10 to $958.40 an ounce.
Stocks In The News
CROCS Inc. (CROX) is surging higher in early afternoon trading after the firm reported a narrower than expected second quarter loss along with revenues that surpasses analyst estimates by a substantial margin. The stock has soared by 36.1 percent, rising to its best intraday price in over one year.
CBS Corp. (CBS) is also gaining following the release of the company's second quarter results, which showed a profit that edged out analyst estimates. The network also reported that it grew its primetime audience, the only one of the four major networks to do so. The stock has jumped by 21.9 percent, reaching its highest intraday level in nearly ten months.
Meanwhile, Leap Wireless (LEAP) is moving sharply lower after the firm revealed a wider-than-expected second quarter loss. Revenues also fell short of analyst forecasts. The stock has plunged by 21.2 percent, extending its recent losing streak and falling to its worst price in eight months.
In Focus: Monthly Jobs Data, Earnings News
As mentioned above, the Labor Department report showed that non-farm payroll employment fell by 247,000 jobs in July following a revised decrease of 443,000 jobs in June. Economists had been expecting employment to fall by 325,000 jobs compared to the drop of 467,000 jobs originally reported for the previous month.
Additionally, the report said that the unemployment rate unexpectedly edged down to 9.4 percent in July from 9.5 percent in June. With the decrease, the unemployment rate fell for the first time since April of 2008.
In earnings news, American International Group reported second-quarter adjusted net income of $2.57 per share, compared to a loss of $10.15 per share in the year ago quarter. Wall Street analysts expected the embattled insurer to earn $1.33 per share for the quarter. The profit was the first for the firm in seven quarters.
Meanwhile, Fannie Mae, the government-sponsored home mortgage finance company, reported a heavy loss for the second quarter on higher credit related expenses, impairments and fair value losses. Further, the company said it has applied for an additional $10.7 billion in aid from the federal government and is dependent on the continued support of the Treasury for operating its business.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan's benchmark Nikkei 225 Index rose by 0.2 percent, while Hong Kong's Hang Seng Index slipped by a substantial margin, posting a loss of 2.5 percent.
Meanwhile, the major European markets closed notably higher, with the French CAC 40 Index and the German DAX Index posting gains of 1.3 percent and 1.7 percent, respectively, while the U.K.'s FTSE 100 Index rose by 0.9 percent.
In the bond markets, treasuries are continuing to show notable weakness. Subsequently, the yield on the benchmark ten-year note is trading at 3.874 percent, posting a gain of 12.8 basis points.
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