RTTNews - After a sharp pullback earlier in the session, stocks are continuing to retreat in early afternoon trading on Friday, as traders react to a disappointing set of economic figures. The major averages are all in negative territory by notable margins, with the data raising concerns that the equity markets have risen too far too fast.
Deflating the mood on Wall Street was the Reuters and University of Michigan preliminary report on consumer sentiment in the month of August, which showed that the consumer sentiment index unexpectedly decreased compared to the previous month.
In a separate report, the Federal Reserve revealed that industrial production in the month of July increased by more than economists had been anticipating, boosted by a jump in auto production.
Earlier, traders looked to figures from the Labor Department showing that consumer prices were unchanged in the month of July, with decreases in food and energy prices offsetting higher prices for apparel and tobacco.
The major averages have steadily extended their losses in recent trading, lingering near their worst levels of the day. The Dow is currently down 142.39 at 9,255.80, the Nasdaq is down 35.93 at 1,973.42 and the S&P 500 is down 15.66 at 997.07.
Electronic storage stocks are retreating by substantial margins in early afternoon trading, with the NYSE Arca Disk Drive Index posting a loss of 3.9 percent. The decline is pulling the index off of the ten-month closing high set on Thursday.
The index is being dragged down by shares of Hutchinson Technology (HTCH), which are plunging by 8.5 percent. With the retreat, the stock is backing further away from a nine-month closing high reached earlier in the week.
Oil service and housing stocks are also posting steep losses, with the Philadelphia Oil Service Sector Index and the Philadelphia Housing Sector both falling by 3.7 percent. The weakness in the oil service sector comes as the price of crude oil is falling nearly $3 a barrel.
Semiconductor, steel, and commercial real estate stocks are also moving notably lower. Gold and natural gas stocks are also under pressure, as most commodities prices are moving lower along with the price of oil.
Stocks In The News
Ticketmaster Entertainment Inc. (TKTM) is retreating in early afternoon trading after the company reported second-quarter net income of $0.12 per share, falling well short of Wall Street expectations of $0.24 per share. The stock is down by 8.4 percent, backing further away from Wednesday's nine-month closing high.
Shares of Blockbuster (BBI) are also pulling back after the company reported a wider than expected second quarter loss of revenues that came in below expectations. The stock has plunged by 13.7 percent, moving further off the one-month high set earlier this month.
On the other hand, shares of AutoDesk (ADSK) are advancing after the firm reported second quarter EPS of $0.24, which topped the consensus estimate of $0.19. The company expects to report third quarter EPS of $0.18 to $0.23, compared to the consensus estimate of $0.21. The stock has risen by 4.4 percent, reaching a ten-month intra-day high.
In Focus: Economic Data, Earnings News
As mentioned above, the Reuters and University of Michigan report showed that the consumer sentiment index fell to a reading of 63.2 in August from a reading of 66.0 in July. The decrease surprised economists, who had been expecting the index to increase to 69.0.
With the unexpected decrease, the consumer sentiment index fell for the second consecutive month, dropping to its lowest level since March.
Separately, the Federal Reserve revealed that industrial production increased by 0.5 percent in July after falling by 0.4 percent in June. With the increase, industrial production rose for the first time since December of 2007. Economists had been expecting a slightly more modest increase in industrial production of about 0.4 percent.
Meanwhile, the Labor Department said its consumer price index was unchanged in July after increasing by an unrevised 0.7 percent in June. The lack of growth in consumer prices came in line with the expectations of economists.
Excluding the decreases in food and energy prices, the core consumer price index edged up 0.1 percent in July following a 0.2 percent increase in the previous month. Economists had expected the index to increase by 0.1 percent.
In earnings news, J.C. Penney Company (JCP) broke even for the second quarter in terms of earnings per share compared to net income of $0.52 per share in the same quarter last year. Thirteen Wall Street analysts polled by Thomson Reuters expected the company to report a loss of $0.01 per share. Looking forward, the company raised its annual profit outlook.
Abercrombie & Fitch (ANF) reported a second quarter net loss of $0.30 per share, compared to net income of $0.87 per share last year. Wall Street analysts expected the company to report a loss of $0.07 per share. Quarterly sales totaled $648.46 million, beating estimates of $646.46 million.
In other news, Europe's largest carmaker Volkswagen AG agreed to buy a 42 percent stake in the sports car unit of Porsche Automobil Holding SE for about 3.3 billion euro by the end of this year. The agreement is expected to lead to the merger of Porsche with Volkswagen, which is scheduled to be completed in 2011.
In overseas trading, stock markets across the Asia-Pacific region finished mostly higher on Friday. Japan's benchmark Nikkei 225 Index rose by 0.8 percent, while Hong Kong's Hang Seng Index climbed up by 0.2 percent. Meanwhile, India's BSE 30 fell by 0.7 percent.
Meanwhile, the major European markets closed notably lower, with the French CAC 40 Index and the U.K.'s FTSE 100 Index falling by 0.8 percent and 0.9 percent, respectively, while the German DAX Index posted a loss of 1.7 percent.
In the bond markets, treasuries are seeing notable strength amid the pullback on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.528 percent, posting a loss of 6.3 basis points.
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