RTTNews - Following a strong start, stocks continue to show strength in early afternoon trading on Thursday after being bolstered early by some encouraging economic data. The major averages are all hovering in positive territory as traders look for additional direction on the day.
The advance in the equity markets comes as traders digest a report released by the Commerce Department showing a notable increase in retail sales in the month of May and first time jobless claims data from the Labor Department that showed a bigger than expected decrease.
In other news, the House Oversight and Government Reform Committee is hosting former Bank of America (BAC) CEO Ken Lewis as part of a growing investigation into whether government officials pressured the bank to withhold details about the purchase of Merrill Lynch from investors despite ballooning losses at the brokerage firm.
Lewis told the Committee that while the alleged threats from federal officials to take drastic action if Bank of America backed out of the deal influenced his decision, they were not the deciding factor.
Treasury and Federal Reserve officials asked us to delay such an action, and expressed significant concerns about the systemic consequences and risk to Bank of America of pursuing such a course, Lewis stated.
Trading could be impacted by the Treasury Department's auction of $11.0 billion worth of thirty-year bonds, scheduled to take place at 1 p.m. ET. Treasury auctions have been in focus recently, as yields have risen despite the Federal Reserve vowing to keep rates low by buying back treasuries.
The major indices have moved roughly sideways in recent trading, largely holding on to the day's solid gains. The Dow is currently up 63.49 at 8,802.51, the Nasdaq is up 9.40 at 1,862.48 and the S&P 500 is up 8.32 at 947.47.
Most of the major sectors are continuing to show strength, helping the major averages to extend their stay in positive territory in afternoon dealing.
Notable strength remains visible among computer hardware stocks, with the Amex Computer Hardware Index up by 2.1 percent on the day. With the day's move, the index has climbed to its best intraday level in over nine months.
Among computer hardware stocks, shares of Palm are currently up 8.3 percent after the smartphone maker said its chairman Jon Rubinstein would assume the additional role of chief executive officer. Rubinstein will succeed Ed Colligan, who is stepping down after sixteen years of leadership at the company.
Banking stocks are also advancing, with the Kbw Bank Index rising by 3 percent on the day, moving to the upper end of a recent trading range.
Bank Of America is turning in one of the sector's best performances, climbing by 7.6 percent and reaching a one-month high. The stock was driven higher following an upgrade by Keefe, Bruyette & Woods, which upgraded the stock to Outperform from Market Perform.
Considerable gains are also visible among natural gas, biotechnology, steel and utility stocks, reflecting the broad based strength in equities on the day. The gains by natural gas stocks have pushed the Amex Natural Gas Index to its best intra-day level in over eight months.
Meanwhile, the major averages are being slowed by the poor performance of housing and real estate stocks, with the Philadelphia Housing Sector Index and the Morgan Stanley Real Estate Index falling by 1.9 percent and 1.6 percent, respectively.
Stocks In The News
Plexus (PLXS) is a posting considerable gain in afternoon trading after announcing that it is partnering with Coca-Cola (KO) to manufacture Coca-Cola Freestyle, a new dispenser that enables consumers to choose from over 100 different branded beverages from a single freestanding unit. Shares of Plexus are currently up 14.2 percent after rising to their best intraday level in nearly nine months earlier in the session.
Del Monte Foods (DLM) is also on the rise after the firm reported fourth quarter net income of $71.5 million or $0.36 per share, compared to $50.4 million or $0.25 per share in the same quarter of last year. Wall Street analysts expected the company to report earnings of $0.26 per share. Traders reacted favorably to the news, helping the stock up by 9 percent to its best intra-day price in over nine months.
On the other hand Vulcan Materials Co (VMC) is sliding after announcing an offering of 11.5 million shares of common stock, cutting its dividend and issuing guidance for 2009 below analyst estimates. The firm's stock is down by 4.9 percent on the day, dipping to its worst intra-day level since late last month.
In Focus: Retail Sales, Employment Data
Before the start of trading, a Commerce Department report showed that retail sales rose 0.5 percent in May following a revised 0.2 percent decrease in April. Economists had expected sales to increase by 0.5 percent compared to the 0.4 percent decrease originally reported for the previous month.
A considerable increase in sales by gas stations contributed to the retail sales growth, with gas station sales jumping 3.6 percent in May after slipping 0.8 percent in April. Excluding the increase in sales by gas station, retail sales showed a much more modest increase of 0.2 percent.
Separately, the U.S. Labor Department revealed that initial jobless claims, a closely watched gauge of layoffs, came in at 601,000 for the week ended at June 6th. This was down 24,000 from the previous week's revised level of 625,000.
However, continuing claims, which measure the number of people receiving ongoing unemployment help, rose to 6.816 million in the week ended May 30th. Due to an upward revision to the previous week's figure, continuing claims rose to a new record high for the 19th consecutive week.
In overseas trading, stock markets across the Asia-Pacific region ended Thursday's session largely unchanged. Japan's benchmark Nikkei 225 Index fell by 0.1 percent, while Hong Kong's Hang Seng closed up by less than a tenth of a percent.
Meanwhile, the major European markets all closed higher following early uncertainty. The U.K.'s FTSE 100 and the French CAC 40 Index both rose 0.6 percent, while German DAX Index closed up 1.1 percent.
In the bond markets, treasuries have climbed into positive territory after showing weakness in morning trading. Subsequently, the yield on the benchmark ten-year note is trading at 3.926 percent, a drop of 1 basis point on the day.
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