Stocks Holding Onto Solid Gains In Mid-Afternoon Trading - U.S. Commentary

 @ibtimes on August 25 2009 2:43 PM

RTTNews - Stocks continue to bounce around in positive territory in mid-afternoon trading on Tuesday after seeing more notable strength early on amid news of Bernanke' reappointment and two better than expected economic reports. The major averages are well off of their best levels of the day, but they are poised for a positive finish across the board after yesterday's lackluster session.

The early strength in the markets came in part as traders reacted to data from research group the Conference Board, which reported that consumer confidence rebounded significantly in the month of August after seeing some deterioration in July. The increase was partly due to an improvement in consumers' assessment of the job market.

Interest in equities also picked up on the heels of data from Standard and Poor's showing that the pace of decline in housing prices slowed by more than economists had been expecting.

In other news, President Barack Obama officially nominated Ben Bernanke for a second term as Federal Reserve Chairman this morning, with the president praising the manner in which the Fed Chief handled the recent financial crisis.

In earnings news, restaurant operator Burger King Holdings (BKC) and retailer Chico's FAS (CHS) reported earnings that surpassed analyst estimates on revenues that also bested forecasts, largely atypical of the most recent earnings season.

The major averages have held their ground in recent dealing, hovering firmly in positive territory but well off their best levels of the day. The Dow is currently up 39.76 at 9,549.04, the Nasdaq is up 5.74 at 2,023.72 and the S&P 500 is up 3.40 at 1,028.97.

Dow Components

A majority of the Dow components are in positive territory in mid-afternoon trading, contributing to the gain being shown by the blue chip index.

Shares of Boeing (BA) are leading the way higher, posting a gain of 2.6 percent. With the gain, the stock is extending its wining streak for a fourth straight session, advancing to a two-month intraday high.

Shares of Home Depot (HD) are also rising, climbing by 1.9 percent. The stock is continuing its zigzag movement, hovering near the eleven-month closing high set in mid-August.

Banking giants Bank of America (BAC) and JP Morgan Chase (JPM) are also showing strength, advancing by 2 percent and 1.4 percent, respectively. The stocks are extending their stay near last week's multi-month highs.

Meanwhile, on the downside, Alcoa (AA) is limiting the gain by the Dow, sliding by 1 percent. With the decline, shares of the aluminum producer are backing further away from the ten-month closing high set in mid-August.

Exxon Mobil (XOM) and Cisco (CSCO) are retreating by more modest margins after paring most of their recent losses over the course of the past week.

Sector News

Biotechnology stocks are showing strong gains in mid-afternoon trading, with the NYSE Arca Biotechnology Index rising by 3.1 percent. The biotechnology index is adding to its recent gains and has set a historic intraday high.

The index is being propelled higher by the performance of Human Genome Sciences (HGSI), which is posting a gain of 13.9 percent. The move comes as the firm has been named as a possible takeover target, with GlaxoSmithKline (GSK) identified as a potential suitor.

Significant strength also remains visible among airline stocks, with the NYSE Arca Airline Index advancing by 3.2 percent on the session. With the gain, the index is looking to end the day at its best closing level in seven and a half months.

Housing and retail stocks are also on the rise, with the Philadelphia Housing Sector Index advancing by 2.3 percent and the S&P Retail Index moving up by 1.8 percent. The housing index was propelled to its best intraday level in nearly eleven months earlier in the session, while the retail index remain stuck in a recent range.

While brokerage, commercial real estate, trucking and electronic storage stocks are also moving notably higher, significant weakness has emerged among oil service and natural gas stocks.

The Philadelphia Oil Service Sector is pulling back off of a two and a half month closing high, while the NYSE Arca Natural Gas Index is backing off a ten and a half month closing high.

In Focus: Economic Data, Bernanke Re-Appointment, Earnings News

As mentioned above, the Conference Board said its consumer confidence index jumped to 54.1 in August from an upwardly revised 47.4 in July. Economists had been expecting the index to increase to 47.9 from the 46.6 originally reported for the previous month.

Lynn Franco, Director of the Conference Board Consumer Research Center said, Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend.

In a separate report, Standard & Poor's said the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.

Additionally, President Barack Obama announced the nomination of Ben Bernanke to a second term as Federal Reserve Bank Chairman.

Obama said, Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outside-the-box thinking that has helped put the brakes on our economic freefall.

The president went on to say that the actions taken by the Bernanke and the Fed were done so out of necessity and helped to bring the economy back from the brink.

On the earnings front, Burger King Holdings (BKC) reported fourth-quarter net income of $0.43 per share, compared to $0.37 per share in the same quarter last year. Wall Street analysts expected the company to report earnings of $0.33 per share.

Burger King said total revenues for the fourth quarter fell 2 percent to $629.9 million from $645.7 million in same quarter last year. Twelve analysts had a consensus revenue estimate of $632.40 million for the quarter.

Chico's FAS Inc. (CHS) announced that its adjusted second-quarter net income rose to $0.10 per share from $0.04 per share in the comparable period last year. Analysts expected the company to report earnings of $0.10 per share for the quarter.

Chico's said its net sales for the quarter rose to $419.9 million from $405.2 million in the year ago quarter. Thirteen analysts had a consensus revenue estimate of $416.70 million for the quarter.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Tuesday. Japan's benchmark Nikkei 225 Index slid by 0.8 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets ended the day moderately higher, with the German DAX Index and the French CAC 40 Index closing up 0.8 percent and 0.6 percent, respectively, while the U.K.'s FTSE 100 Index climbed 0.4 percent.

In the bond markets, treasuries have begun to show strength and are near their best levels of the day. Subsequently, yhe yield on the benchmark ten-year note is trading at 3.462 percent, falling by 3.2 basis points.

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