RTTNews - Following a shaky morning, stocks are posting mild gains in afternoon trading on Friday. The session has been marred by low volume, as the major averages have been unable to sustain any major moves.
Some traders are taking part in bargain hunting after the recent pullback in equities and ahead of the Memorial Day weekend. The lack of conviction has also come amid the lack of significant economic news.
As earnings season winds to a close, traders are considering encouraging earnings data from Sears Holdings (SHLD), Gap (GPS) and Campbell's Soup (CPB), prompting some of the gains in equities.
On the corporate front, media reports indicated that the government is making preparations for auto icon General Motors (GM) to enter bankruptcy later next week.
The major averages are all in positive territory, moving sideways in recent trading. The Dow is currently up by 40.47 to 8332.60, the Nasdaq is up 6.93 to 1702.03, and the S&P 500 is up by 3.34 to 891.67.
The Dow components are largely positive, contributing to modest gains by the blue chip index on the day.
Helping to buoy the Dow are shares of McDonald's (MCD) which are up by 2.6 percent on the day. With the climb, the stock is extending recent gains, moving to its highest level since February.
Meanwhile, shares of Disney (DIS) and E.I. Du Pont De Nemours (DD) are also higher, rising by 2.4 and 2.2 percent, respectively, taking back some of their recent losses.
The blue chip index is being limited by shares of General Motors (GM) which are down by 17.1 percent, as the firm is likely heading towards bankruptcy.
Weakness is also visible in shares of Bank of America (BAC), American Express(AXP) and Alcoa (AA), all down by at least 1.5 percent.
The majority of sectors are posting gains in afternoon trading, contributing to the mild climb seen by the major averages on the day.
Resource stocks continue to turn in one the day's best performances, with gold stocks seeing considerable strength. The Amex Gold BUGS Sector Index is up by 1.8 percent on the day, extending recent gains and reaching a fresh 10-month high. The move has come as gold futures are adding to their earlier gains on the NYMEX.
Strength has also emerged in railroad and oil service stocks, with the Dow Jones Railroads Index and the Philadelphia Oil Services Sector Index climbing by 1.4 and 1.3 percent, respectively.
Notable weakness continues in airline stocks, as reflected by a fall of 1.7 percent in the Amex Airline Index. With the decline, the index continues to give back recent gains, falling to its lowest level since late April.
Meanwhile, banking and healthcare stocks are also limiting the day's gains.
In Focus: Credit Card Legislation, Earnings, Corporate News
President Barack Obama is expected to approve a major regulatory overhaul for the credit card industry later today, after the legislation flew through congress this week. The new rules for the largely unregulated credit card industry are designed to protect consumers from surprise charges and rate increases.
If signed into law, the bill would protect consumers from arbitrary interest rate, fee and finance charge increases and prohibit universal default on existing balances. It would also prohibit interest charges on paid-off balances from previous billing cycle.
GMAC Financial Services LLC, the financial arm of automaker General Motors Corp. (GM), said Thursday that it received a $7.5 billion capital infusion from the U.S. Treasury Department.
General Motors may be sent into bankruptcy protection by the U.S. government as early as the end of next week, according to the Washington Post.
Under the tentative bankruptcy plan, GM reportedly could receive just short of $30 billion in additional federal loans, pushing the government's investment in the automaker to nearly $45 billion. The report stated that the planned capital injection was just a starting point in discussions and could change.
The move comes as the Obama administration is preparing to lift Chrysler LLC out of bankruptcy next week.
American International Group (AIG) said its Chairman and CEO Edward Liddy, who led the uphill task of reinstating confidence in the minds of investors, intends to step down once the board finds a successor. Liddy was also instrumental in persuading the Board to accept and segregate the roles of Chairman and CEO, and will have a separate Chairman and CEO now.
Diversified healthcare giant Johnson & Johnson (JNJ) announced Thursday that it agreed to acquire a development stage biopharmaceutical company, Cougar Biotechnology Inc. (CGRB), for about $1.0 billion in a cash tender offer. Following the news, Cougar's shares are up 16.1 percent in afternoon trading.
On the earnings front, Sears Holdings (SHLD) announced a surprising first-quarter profit Friday morning, even as revenues dived $1 billion. The firm reported adjusted of $0.38 cents a share, beating the consensus estimate for a loss of $0.88 cents a share.
Shares are extending their gains following the report, climbing by 15.5 percent in afternoon trading.
Retailer Gap Inc. (GPS) reported first-quarter earnings after the closing bell on Thursday. The firm announced net income of $215 million or $0.31 per share, compared to $249 million or $0.34 per share in the same quarter last year. Wall Street analysts expected the company to earn $0.30 per share for the quarter. Traders reacted positively to the news, as the stock is up by 2.0 percent in afternoon trading.
Campbell Soup (CPB), the world's largest soup maker, said Thursday after the markets closed that its third quarter profit dropped 67 percent from last year, when results were boosted by a hefty gain from the sale of the Godiva Chocolatier business. However, the company's quarterly earnings per share, excluding special items, came in above analysts' expectations. The company also raised its fiscal year 2009 adjusted earnings outlook.
Shares of Campbell Soup are up by 1.4 percent in afternoon trading as investors continue to react to the earnings figures.
In other news, the Office of Thrift Supervision announced Thursday the closing of Florida-based BankUnited FSB, and named the FDIC as receiver. Investors led by John Kanas invested $900 million to acquire the new BankUnited, making it one of Florida's best capitalized banks.
In overseas trading, stock markets across the Asia-Pacific region finished lower on Friday. Japan's benchmark Nikkei 225 Index slipped by 0.4 percent and Hong Kong's Hang Seng Index fell 0.8 percent.
Meanwhile, the major European markets closed modestly higher. The French CAC 40 Index and the German DAX Index both finished higher by 0.3 percent. The U.K.'s FTSE 100 Index also closed mildly higher, rising by 0.4 percent.
In the bond markets, treasuries are showing considerable weakness. The yield on the benchmark ten-year note is up to 3.444 percent, a climb of 9.1 basis points on the day.
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