RTTNews - Stocks remain moderately higher in mid-afternoon trading on Friday, shrugging off earlier volatility that came on the heels of mixed quarterly GDP data. The major averages continue to tread in positive territory, looking to build on their best levels of the year, reached in the previous session.
This morning, traders looked to fresh statistics from the Commerce Department indicating that the U.S. economy continued to shrink in the second quarter, although the pace of contraction slowed by more than economists had been expecting. Consumer consumption was far less than what economists had been expecting, however, raising concerns regarding the prospect of near-term economic recovery.
With earnings season drawing to a close, Disney (DIS) and Monster Worldwide (MWW) reported earnings that beat forecasts, while oil giant Chevron (CVX) disappointed. The season's earnings results largely beat expectations, but for the most part due to cost cutting measures rather than revenue growth in a market constricted by the recession.
The major averages have continued to see choppy trading, largely holding onto their gains in recent dealing. The Dow is currently up by 51.77 at 9,206.23, the Nasdaq is up 9.19 at 1,993.49 and the S&P 500 is up 5.17 at 991.92.
The majority of the Dow components are moving higher in mid-afternoon trading, contributing to the gain being shown by the blue chip index.
One of the Dow's strongest performers is Alcoa (AA), which is up by 3.7 percent. The stock is extending its recent gains and is now at its best level in roughly six weeks.
Shares of financial giant Bank of America (BAC) are also boosting the Dow, rising by 3.5 percent. The stock is up for the fifth straight session and has reached its best intra-day price in well over two months.
Travelers (TRV), Caterpillar (CAT), General Electric (GE) and 3M (MMM) are also moving higher by substantial margins, while Disney is down, sliding by 3.4 percent. With the decline, the stock is backing further off its highest closing price in nine months set last week.
Disney's steep move to the downside was prompted by the firm's third quarter income report, which revealed that revenues fell well short of Wall Street expectations.
Although Johnson and Johnson (JNJ) and McDonald's (MCD) are also falling, the stocks are posting much more moderate losses. Johnson and Johnson is down by 1.2 percent, retreating from an eight month high while McDonald's is declining by 0.8 percent, extending its recent pullback.
The resource sector continues to be led by strong outings by gold stocks, with the NYSE Arca Gold Bugs Index rising by 5 percent. The upward move was largely prompted by an increase in the price of gold on the NYMEX, where gold has soared by $19.80 to $954.70 an ounce on the day.
Steel stocks are also gaining, with the NYSE Arca Steel Index posting a gain of 2.9 percent. The index is being helped by the performance of Posco (PKX), which is up by 5 percent on the session. The advance has propelled the stock to a ten-month intra-day high.
Trucking and housing stocks are also on the rise, with the Dow Jones Trucking Index and the Philadelphia Housing Sector Index rising by 2.3 percent and 1.9 percent, respectively. While the trucking index has reached its best intraday level in roughly six weeks, the housing index has climbed to its highest intraday level in nearly three months.
While natural gas, software and semiconductor stocks are also climbing, considerable losses remain visible among electronic storage stocks. The NYSE Arca Disk Drive Index is down by 1.2 percent, pulling back its best closing level in nearly ten months set on.
Biotechnology stocks are also continuing their disappointing performance, although sliding by much more modest margins.
In Focus: Economic Data, Earnings News
As mentioned above, the U.S. Commerce Department said that Gross Domestic Product fell at a pace of 1 percent for the second quarter. Economists had expected GDP to fall at a 1.5 percent rate.
Some pessimism was generated by the personal consumption figure in the report, which showed a decrease of 1.2 percent, significantly more than economists had been expecting. This followed a 0.6 percent increase in the first quarter.
Traders also looked to the results of the Institute of Supply Management-Chicago's business survey for July, which came in slightly higher than expected at 43.4. Economists expected the business barometer index to come in at 43 after rising by 5 points to 39.9 in June.
On the earnings front, Chevron reported net income of $0.87 per share for the second quarter compared to $2.90 per share in the second quarter last year. The results came in short of Wall Street expectations of $0.95 per share, as revenues plunged by 71 percent.
Monster Worldwide revealed adjusted second-quarter net income of $0.03 per share, compared to net income of $0.40 per share in the prior year quarter. The firm beat analyst forecasts for earnings of $0.01 per share for the quarter. The firm reported adjusted revenues of $224 million, falling short of the $225 million estimated by analysts.
In overseas trading, stock markets across the Asia-Pacific region finished largely on the upside on Friday, with Hong Kong's Hang Seng Index and Japan's benchmark Nikkei 225 Index posting gains of 1.7 percent and 1.9 percent, respectively.
Meanwhile, the major European markets closed modestly lower, with the U.K.'s FTSE 100 Index and the German DAX Index both finishing down by 0.5 percent, while the French CAC 40 Index dipped by 0.3 percent.
In the bond markets, treasuries are adding to their already strong gains following the day's GDP data. Subsequently, the yield on the note, which moves opposite of its price, is trading at 3.501 percent, posting a loss of 14.0 basis points.
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