RTTNews - Stocks continue to show uncertainty in early afternoon trading on Wednesday, as light trading volume and a string of mixed economic reports have led to choppy movement in the equity markets. The major averages continue to show a lack of conviction ahead of Friday's employment report.
This morning, traders digested a fresh batch of economic data, including a Commerce Department report showing that factory orders increased by less than economists had been expecting in July.
Ahead of the opening bell, Automatic Data Processing, Inc. (ADP) said that non-farm private employment fell by more than economists had been anticipating in August, although the loss of jobs still marked the smallest drop in employment since September of 2008.
Separately, the Labor Department released its revised report on labor productivity in the second quarter, showing that productivity increased by more than previously estimated amid a smaller than expected drop in output.
Later today, the minutes of the Federal Reserve's August meeting will be in focus, with traders looking for the Fed's most recent economic outlook. The minutes are scheduled to be released at 2:00 p.m. ET.
The major averages have seen little change in recent trading, lingering near the unchanged line. The Dow is currently up 7.93 at 9,318.53, the Nasdaq is up 4.13 at 1,973.02 and the S&P 500 is up 0.49 at 998.53.
The major sectors are roughly split in early afternoon trading, contributing to lack of conviction being shown by the broader markets.
Gold stocks are surging higher, as reflected by the 6.5 percent gain being shown by the NYSE Arca Gold Bugs Index. The strength in the sector comes as gold for December delivery is currently up $19.60 to $976.10 an ounce.
Within the sector, Harmony Gold (HMY) is turning in one of the best performances, advancing 8.6 percent on the day. The gain has lifted the stock to its best intraday price in two months' time.
Significant strength also remains visible among health insurance stocks, with the Morgan Stanley Healthcare Payor Index up by 3.9 percent, bouncing off of a three-week low set in the previous session.
While oil, brokerage, telecom and computer hardware stocks are also moving modestly higher, notable weakness is visible among housing and networking stocks. The Philadelphia Housing Sector Index and the NYSE Arca Networking Index are sliding by 2.4 percent and 1.4 percent, respectively, moving further away from their recent highs.
Banking stocks are also moving lower, with the Kbw Bank Index posting a loss of 1.5 percent. With the retreat, the banking index is pulling back further off a nine-month closing high.
Stocks In The News
VeriFone Holdings (PAY) is moving sharply higher in early afternoon trading after the firm reported a third quarter earnings of $0.26, topping the consensus estimate of $0.18 per share. The company also forecast better than expected fourth quarter and full year earnings. VeriFone has surged up by 27.7 percent, reaching its best intraday price in ten and a half months.
MDS Inc. (MDZ) is also on the rise after announcing that it entered into an agreement to sell its MDS Analytical Technologies business to Danaher Corp. (DHR) for $650 million in cash. MDS currently intends to return approximately $400 million to $450 million of the sale proceeds to its shareholders. The stock has jumped by 22.4 percent, reaching its best intraday level in roughly seven months.
On the other hand, shares of CA Inc. (CA) are moving lower after the company said that its CEO, John A. Swainson, plans to retire from the company on December 31, 2009, or upon the earlier selection of a successor. Shares of the independent IT management software firm are retreating by 6.6 percent, slipping to a five-week intraday low.
In Focus: Economic Data, Corporate News
As mentioned above, the Commerce Department released a report that showed that orders for manufactured goods increased by 1.3 percent in July following a revised 0.9 percent increase in June. Economists had expected orders to increase by 2.2 percent compared to the 0.4 percent growth originally reported for the previous month.
Separately, Automatic Data Processing, Inc. (ADP) said that non-farm private employment fell by 298,000 jobs in August following a revised decrease of 360,000 jobs in July. Economists had expected a decrease of about 246,000 jobs compared to the loss of 371,000 jobs originally reported for the previous month.
Meanwhile, a report from the Labor Department showed that productivity increased by 6.6 percent in the second quarter compared to the 6.4 percent increase that was reported last month. Economists had been expecting productivity growth to be unchanged at 6.4 percent.
Additionally, the Labor Department said that unit labor costs decreased by a revised 5.9 percent in the second quarter compared to the previously reported 5.8 percent drop.
In corporate news, video-game publisher Take-Two Interactive (TTWO) said Tuesday after the markets closed that it swung to a third quarter loss, as revenue dropped 68 percent from last year, when it benefited from the performance of its blockbuster title Grand Theft Auto IV.
Filtration systems maker Donaldson Co. (DCI) said that its fourth quarter profit declined by 51.5 percent from last year, hurt by restructuring expenses and the negative impact of foreign currency translation.
Meanwhile, London-based British Petroleum (BP) revealed that it has made a giant oil discovery at its Tiber Prospect in the deepwater Gulf of Mexico. The well was drilled in Keathley Canyon block 102.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Wednesday. Japan's benchmark Nikkei 225 Index closed down by 2.4 percent, and Hong Kong's Hang Seng Index fell by 1.8 percent.
The major European markets closed modestly lower, with the French CAC 40 and German DAX Index falling by 0.3 percent and 0.1 percent, respectively, while the U.K.'s FTSE 100 slipped by less than a tenth of a percent.
In the bond markets, treasuries are bouncing around in positive territory amid the continued uncertainty on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.337 percent, posting a loss of 3.8 basis points.
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