With traders reluctant to make any significant moves following the strong gains seen in the two previous months, stocks have shown a lack of direction throughout the trading day on the first day of May. The major averages have been bouncing back and forth across the unchanged line.
The choppy trading is partly due to the release of some mixed earnings news, with oil giant Chevron (CVX) reporting better than expected earnings while life insurance giant MetLife (MET) reported a loss compared to a year-ago profit.
Dow component Chevron reported first quarter earnings of $1.84 billion or $0.92 per share, down sharply from $5.17 billion or $2.48 per share in the year-ago quarter but above analyst estimates of $0.81 per share.
Meanwhile, MetLife reported a loss for the first quarter of $574 million or $0.71 per share compared with a profit of $615 million or $0.84 per share in the same quarter last year.
On the economic front, the Institute for Supply Management released a report showing that activity in the manufacturing sector continued to contract in the month of April, although the pace of contraction slowed by more than economists had expected.
The ISM said its index of activity in the sector rose to 40.1 in April from 36.3 in March, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a more modest increase to a reading of 38.4.
Commenting on the increase, Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee noted, While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again.
Separately, the Commerce Department said that factory orders fell by 0.9 percent in March following a downwardly revised 0.7 percent increase in February. The decrease was steeper than the 0.6 percent decrease expected by economists.
The major averages are currently turning in a mixed performance, with the S&P 500 posting a modest gain. While the S&P 500 is currently up 0.43 at 873.24, the Dow is down 10.51 at 8,157.61 and the Nasdaq is down 1.87 at 1,715.43.
Despite the lackluster performance by the broader markets, housing stocks are seeing considerable weakness, dragging the Philadelphia Housing Index down 2.5 percent. With the loss, the index is pulling back further off the six-month closing high that it set last Friday.
The weakness among housing stocks comes as traders do some profit taking amid lingering uncertainty about the outlook for the housing market. M/I Homes (MHO) and D.R. Horton (DHI) are turning in two of the sector's worst performances.
Considerable weakness has also emerged among banking stocks, as reflected by the 1.3 percent loss currently being shown by the Kbw Bank Index. Nonetheless, the index remains stuck in a recent trading range.
Real estate, trucking, and retail stocks are also seeing notable weakness, although selling pressure remain somewhat subdued. The losses by retail stocks are contributing to a 2.4 percent loss by the S&P Retail Index, which is pulling back off a more than six-month closing high.
On the other hand, resource stocks continue to post notable gains, with steel stocks posting particularly strong gains. Energy stocks are also moving sharply higher as the price of oil jumps $1.78 to $52.90 a barrel.
Despite the increase by the price of oil, oil-sensitive airline stocks are also posting strong gains, resulting in a 2.6 percent gain by the Amex Airline Index. Airline stocks remain well off their recent highs, however, as traders remain concerned about the impact of the swine flu outbreak.
Some defense stocks are also posting strong gains, with shares of Flir Systems (FLIR) currently up 13.2 percent after reporting better than expected first quarter earnings growth. Internet, railroad, and computer hardware stocks are also seeing considerable strength.
Stocks In The News
Among individual stocks, shares of Chiquita Brands (CQB) are seeing significant strength in early afternoon trading, with the bananas and fresh produce distributor currently up 19 percent. At its high for the session, Chiquita was at a two-month intraday high.
The gain by Chiquita comes after the company reported first quarter earnings that fell year-over-year but came in above analyst estimates. At the same time, the company reaffirmed its full year guidance despite its better than expected first quarter results.
Shares of Manitowoc (MTW) have also shown a strong upward move after the manufacturer of cranes and foodservice equipment reported better than expected adjusted first quarter earnings. Manitowoc is currently up 12.9 percent after reaching its best intraday level in over three months.
On the other hand, shares of MasterCard (MA) are down 7.3 percent after the credit card company reported better than expected earnings but provided disappointing guidance. The loss by MasterCard also comes after it ended Thursday's trading at a seven-month closing high.
Overseas, most of the major markets in both the Asia-Pacific region and Europe were closed for May Day holidays. Nonetheless, Japan's benchmark Nikkei 225 Index closed up 1.7 percent, while the U.K.'s FTSE 100 Index closed nearly flat.
In the bond market, treasuries are seeing significant weakness, with the benchmark ten-year note falling to its worst intraday level in over five months. Subsequently, the yield on the ten-year note is currently up 6.7 basis points at 3.191 percent.
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