RTTNews - Stocks are holding onto modest gains in early afternoon trading on Friday after seeing some volatility amid mixed data on second quarter GDP. The major averages are all in positive territory, although the gains have been limited.
The U.S. economy continued to shrink in the second quarter, according to new statistics from the Commerce Department released Friday, 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.
This afternoon, traders may look to the White House, where President Barack Obama will make a statement regarding the state of the economy at 1:15 p.m. ET.
Meanwhile, the administration will meet today with congressional leaders today to find and develop ways to continue to fund its popular cash for clunkers program, White House press secretary Robert Gibbs told reporters Friday. Congress is moving quickly to add $2 billion to fund the program, as dealers expressed confusion about whether the program would continue.
With earnings season winding down, 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 seen choppy trading in recent dealing, remaining largely in a holding pattern. The Dow is currently up 18.67 at 9,173.13, the Nasdaq is up 3.93 at 1,988.23 and the S&P 500 is up 0.93 at 987.68.
Gold stocks continue to turn in some of the day's best performances, with a 4.1 percent gain being posted by the NYSE Arca Gold Bugs Index. The index is being bolstered by shares of Eldorado Gold Corp. (EGO), which are up by 5 percent on the day. The day's advance has lifted the stock to its best intraday price in nearly two months.
Steel and trucking stocks are also on the rise, with the NYSE Arca Steel Index and the Dow Jones Trucking Index rising by 2.1 percent and 1.5 percent, respectively. While the steel index remains stuck in a recent range, the trucking index reached its best intraday level in roughly six weeks earlier in the session.
While housing, defense and semiconductor stocks are also climbing, considerable losses have remain visible among electronic storage stocks. The NYSE Arca Disk Drive Index is down by 1.5 percent, falling away from its best closing level in nearly ten months set on Thursday. Tobacco, utility, and biotechnology stocks are also sliding, although by much more modest margins.
Stock In The News
Shares of Brazil based aircraft manufacturer Embraer (ERJ) are on the rise in early afternoon trading after the firm reported income from operations that rose by 54 percent in the second quarter. The stock is up by 6.5 percent, climbing to its best level in nearly two months.
Valassis Communications (VCI) is also gaining after the company reported second quarter net earnings $0.33 per share, crushing analyst estimates of $0.14 per share. The stock has surged by 14.2 percent, soaring to its best intraday level in nearly one year.
On the other hand, Ingram Micro (IM) is sliding after the company announced that its second quarter net income and revenues that fell well short of Wall Street estimates. Shares of the information technology wholesale distributor are down by 8.4 percent, backing further off of their best closing level in over ten months set late last week.
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.
Walt Disney reported adjusted third quarter income of $0.52 per share, compared to $0.62 per share in the prior year quarter. Revenues for the quarter fell by 7 percent to $8.60 billion from $9.24 billion posted in the same period last year. Wall Street analysts expected the company to earn $0.51 per share on revenues of $8.83 billion for the third quarter.
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 3.522 percent, posting a loss of 11.9 basis points.
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