RTTNews - After a shaky start to the day's session, stocks are continuing to see some volatility in afternoon trading on Friday. The lack of direction comes as traders are digesting a batch of largely mixed economic data, attempting to evaluate near-term economic prospects.
Earlier, traders digested consumer sentiment data for May from Reuters and the University of Michigan that showed its best results in eight months. Separately, the Commerce Department said that gross domestic product for the first quarter contracted, although at a slower rate.
Meanwhile, trader optimism was limited by manufacturing data from the Chicago area, which continued to show a notable slowdown in the region.
Traders also looked to remarks from President Barack Obama, who announced the establishment of a cyber security office. The new office is expected to establish a system that will restrict outside access to government networks, which has been identified as an area of concern by the administration.
In addition to announcing the new office, President Obama announced a new education effort aimed at increasing awareness of cyber security threats.
The major averages are currently turning in a mixed performance, although they are all lingering near the unchanged line. While the S&P 500 is up 1.45 at 908.28, the Dow is down 7.88 at 8,395.92 and the S&P 500 is down 2.06 at 1,749.73.
The major sector indices are largely split in early afternoon trading, helping to keep the major averages near the unchanged mark.
Benefiting from a continued increase in commodities prices, resource stocks are continuing to show strength on the day. Gold stocks are holding onto notable gains, driving the Amex Gold Bugs Index up 3.7 percent.
Among gold stocks, Randgold Resources (GOLD) is posting a notable gain, with the gold mining company currently up 1.1 percent. At its high for the session, stock was at a fresh historic high.
Within the resource sector, oil, steel, and natural gas stocks also posting strong gains amid rising commodity prices. Transportation stocks are also seeing considerable strength despite the increase in the price of oil.
Meanwhile, significant weakness remains visible among defense stocks, as reflected by the 1.6 percent loss currently being shown by the Philadelphia Defense Sector Index. Esterline Technologies (ESL) is leading the sector lower, falling 7.5 percent.
Stocks in the News
Shares of J Crew (JCG) are on the rise after the firm reported net income for the first quarter of $20.4 million or $0.32 per share, compared to $30.5 million or $0.48 per share for the year-ago quarter. The results beat analyst estimates for earnings of $0.11 per share.
The firm was also bolstered by an upgrade from Goldman Sachs, which raised its rating on the apparel company to Neutral from Sell. J Crew is up by 24.7 percent in afternoon trading, reaching its best level in well over seven months.
Supervalu (SVU) is also seeing notable strength after announcing that its board of directors approved a 1.45% increase in the annual indicated dividend to $0.70 per share from last year's level of $0.69 per share. Supervalu's board also adopted a new annual share repurchase program authorizing the company to purchase up to $70 million worth of its common stock.
Shares of the grocery conglomerate are up by 2.1 percent in afternoon dealing, adding to recent gains.
Meanwhile, Cintas (CTAS) is falling following the release of fourth quarter guidance. The firm announced it expects earnings per share between $0.34 and $0.37. After a restructuring charge of about $50 million, earnings per share are expected to come in at $0.01 and $0.04 per share.
Analysts polled by Thomson Reuters expect Cintas to report earnings of $0.47 per share on revenues of $923.21 million. The firm's stock has slipped by 5.9 percent, falling to its worst level in over two months.
In Focus: Economic Data, Earnings, General Motors
The Reuters/University of Michigan survey on consumer sentiment for May showed that its revised reading came in at 68.7, higher than the previously reported reading of 67.9. The result was also higher than April's final level of 65.1. Analysts expected the survey to yield a reading of 68.0.
With the upward revision, the consumer sentiment index rose to its highest level in eight months, adding to recent signs of optimism among consumers.
On the other hand, activity in the Chicago-area manufacturing sector continued to contract in the month of May, according to a report released by the Institute for Supply Management - Chicago, with the pace of contraction unexpectedly accelerating compared to the previous month.
The ISM-Chicago said its index of activity in the sector fell to 34.9 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists had been expecting the index to edge up to a reading of 42.0.
Earlier, trader optimism was bolstered by a report from the Commerce Department that showed economic activity in the first quarter contracted at a slightly slower than previously estimated pace. The report, however, also showed a downwardly revised pace of consumer spending growth in the quarter.
Specifically, the data said that gross domestic product fell 5.7 percent in the first quarter compared to the advance estimate of a 6.1 percent decrease. Economists had been expecting the pace of contraction to be revised to 5.5 percent.
On the corporate front, automaker General Motors (GM) plans to file for bankruptcy protection June 1st, according to reports. Most of the company's assets would be sold to a new company sponsored by the U.S. Treasury Department.
On the earnings front, Dell Inc. (DELL) released a first quarter earnings report that showed net income of $0.15 per share, compared $0.38 per share in the prior year period. The company said the quarterly earnings included expenses that weighed down the bottom line by $0.09 per share. Wall Street analysts expected the company to report earnings of $0.23 per share.
Stocks markets across the Asia-Pacific region turned in a strong performance on Friday. Japan's benchmark Nikkei 225 Index rose by 0.8 percent, while Hong Kong's Hang Seng climbed by 1.6 percent.
The major European markets also ended the day moderately higher. The French CAC 40 Index and the German DAX Index closed up 0.4 percent and 0.2 percent, respectively, while the U.K.'s FTSE 100 Index rose 0.7 percent.
In the bond markets, treasuries are showing notable strength on the day. Subsequently, the yield on the benchmark ten-year note is down to 3.515 percent, a drop of 15.7 basis points on the day.
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