RTTNews - Stocks are seeing mild gains in mid-afternoon trading on Tuesday following a shaky outing for most of the day. The major averages have bounced in and out of positive territory as some traders are doing some profit taking while others have continued to buy stocks amid a pick up in prospects in the housing sector.
Earlier in the session, traders reacted positively to the release of a report from the National Association of Realtors showing that pending home sales increased by much more than expected in the month of April. The increase came as homebuyers responded to very favorable market conditions.
While the data helped the major averages bounce well off their lows for the session and into positive territory, buying interest waned shortly afterward. Some traders were reluctant to continuing buying stocks following the substantial rally seen on Monday.
The major averages have shown a notable move back to the upside in recent trading, although they remain off their highs. The Dow is currently up 44.90 at 8,766.34, the Nasdaq is up 12.33 at 1,841.01 and the S&P 500 is up 4.49 at 947.36.
Most Dow components are moving higher, helping to prop up the blue chip index in mid-afternoon trading.
Kraft Foods (KFT) is one of the Dow's best performers, rising by 1.7 percent on the day. The stock is adding to its recent gains, climbing to its best intra-day level in four months.
Shares of Alcoa (AA) and Boeing (BA) are also helping the Dow to tread above the unchanged mark, rising by 4.3 percent and 3.2 percent, respectively. Pfizer (PFE) is also a top gainer, climbing by 2.2 percent on the day.
Meanwhile, shares of American Express (AXP) and JP Morgan Chase (JPM) are under pressure, falling 4.6 percent and 3.1 percent, respectively. The losses come after the companies revealed broad equity offerings as a means to raise capital.
Citigroup (C) is also showing a significant decline, falling by 5.7 percent. Intel (INTC) and IBM (IBM) are also posting notable losses.
As traders continue to mull over near-term economic prospects, the major sectors are turning in a mixed performance, contributing to the uncertain movements seen by the major averages on the day.
Nonetheless, biotechnology stocks are posting notable gains on the day, with the Amex Biotechnology Index jumping by 1.8 percent. The day's gains have lifted the index to its best intraday level in over two months, challenging March levels.
Airline stocks also continue to show strength on the day, as reflected by the 5.8 percent gain displayed by the Amex Airline Index. With the advance, the index is moving further off the nearly two-month closing low that it set last week, rising to its best intraday level in three weeks.
Considerable strength also remains visible among housing, railroad, and health insurance stocks. WellPoint (WLP) and UnitedHealth (UNH) are helping to lead the health insurance sector higher, rising nearly 3 percent each.
Meanwhile, semiconductor stocks are seeing significant weakness, dragging the Philadelphia Semiconductor Index down 3.2 percent. With the decline, the index is pulling back well off the nearly eight-month closing high it set on Monday.
Banking stocks also remain pressure after several financial giants announced capital raising plans, with the S&P Banks Index down 3 percent. Some real estate, computer hardware, and natural gas are also posting notable losses.
In Focus: Pending Homes Sales Data, Corporate News, Auto Sales
Earlier in the day, a report from the National Association of Realtors showed that the pending home sales index rose 6.7 percent to 90.3 in April from a reading of 84.6 in March. Economists had been expecting a much more modest increase by the index of about 0.5 percent.
In corporate news, General Motors revealed this morning that it has entered into a memorandum of understanding, or MoU, with a buyer for its premium off-road brand Hummer. The deal would save around 3000 jobs in the U.S.
GM said that the transaction is the result of its strategic review of the Hummer brand and the company's ongoing restructuring efforts. Under the terms of the MoU, the identity of the purchaser and proposed financial terms of the agreement are not being officially released at this time.
Separately, GM said it delivered a total of 191,875 vehicles in May, down 29.6 percent from 272,363 vehicles last year. GM total truck sales were 110,866 vehicles, down 22 percent from 142,248 vehicles last year, and car sales were down 38 percent to 81,009 from 130,115 vehicles a year-ago. The company delivered a total of 1,739 hybrid vehicles in May.
Ford (F) said Tuesday that its May U.S. sales fell 24.2 percent from a year ago, as vehicle demand continued to shrink in a challenging economic and competitive environment. However, the automaker's May sales were up 20 percent from the previous month, making it the highest sales for any month since July 2008.
Meanwhile, financial services provider JP Morgan Chase said Monday that it plans to raise around $5 billion in common equity as part of its effort to repay $25 billion of the capital it received from the federal bailout fund.
American Express also revealed that it has commenced a public offering of $500 million of its common stock. Part of the funding is expected to go to a repurchase of $3.4 billion of preferred shares issued to the U.S. Treasury as part of the Capital Purchase Program.
In other news, shares of DeVry (DV) are moving higher after Standard & Poor's announced that the education company would replace General Motors in the S&P 500. Devry is currently posting a __ percent gain.
In overseas trading, stock markets across the Asia-Pacific region finished mixed. Japan's benchmark Nikkei 225 Index edged up by 0.3 percent, while Hong Kong's Hang Seng fell 2.6 percent.
The major European markets also turned in a mixed performance. The French CAC 40 Index slipped by less than a tenth of a percent, while the German DAX Index rose by a minute margin. The U.K.'s FTSE 100 Index dropped by 0.7 percent.
In the bond markets, treasuries are holding onto modest gains in mid-afternoon trading, although they have moved well off of their best levels of the day. Subsequently, the yield on the benchmark ten-year note is trading at 3.686 percent, a drop of 2.9 basis points on the day.
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