RTTNews - Stocks are holding onto strong gains in early afternoon trading on Monday, boosted by encouraging economic data released this morning. The major averages are all in positive territory by substantial margins, with the S&P 500 crossing the 1,000 mark for the first time since November.
On the economic front, the Institute for Supply Management released a report showing a much slower than expected pace of contraction in manufacturing activity in July. The report showed notable improvement in new orders and production.
The Commerce Department also revealed that construction spending came in far higher than expected for June after a notable slide in May.
In earnings news today, Humana (HUM) and Tyson Foods (TSN) beat Wall Street estimates while traders are looking forward to the release of results from homebuilding stalwarts Centex (CTX) and Pulte Homes (PHM) after the closing bell this afternoon.
The major averages have been in a holding pattern, recently seeing choppy trading. The Dow is currently up 85.78 at 9,257.39, the Nasdaq is up 19.70 at 1,998.20 and the S&P 500 is up 11.83 at 999.31.
Resource stocks are continuing their strong performance, building on the gains posted late last week. The strength in the sector comes as commodities prices are moving sharply higher amid optimism about the outlook for demand.
Healthcare provider stocks are showing strong moves to the upside, with the Morgan Stanley Healthcare Provider Index posting a gain of 3.6 percent. The advance has lifted the index to its best level in just over ten months.
Community Health Systems (CYH) is helping to lead the sector higher, advancing 9.7 percent. Health Management Associates (HMA) and Tenet Healthcare (THC) are also posting notable gains.
Banking and electronic storage stocks are also on the rise, with the Kbw Bank Index and the NYSE Arca Disk Drive Index climbing by 2.2 percent and 2.8 percent, respectively.
The banking index is at its best intraday level in nearly three months, while the disk drive index is hovering near the ten-month closing high set late last week.
Significant strength is also visible among semiconductor stocks, which have been boosted by a report from the Semiconductor Industry Association showing a 17 percent increase in chip sales in the second quarter. The Philadelphia Semiconductor Index is up by 1.3 percent, poised to finish at its best level in ten months.
Transportation, networking and defense stocks are also advancing by considerable margins, reflecting the broad based strength in equities on the day.
Stocks In The News
Specialty vehicles maker Oshkosh (OSK) is surging in early afternoon trading after the firm said it received an additional $1.06 billion order from the Pentagon to deliver 1,700 additional Mine-Resistant, Ambush-Protected All Terrain Vehicles. The stock has surged up by 10.1 percent, reaching its best intraday price in just over one year's time.
Barclays PLC (BCS) is also moving higher after the firm said its six-month pre-tax profit increased to £2.98 billion from £2.75 billion in the comparable period. Shares of the British banking giant are up by 7.4 percent, reaching a ten-month intraday high.
On the other hand, shares of biopharmaceutical firm Savient (SVNT) are plunging after the FDA rejected the firm's gout drug KRYSTEXXA. The stock is plummeting by 22.5 percent, falling to its worst intraday price in seven weeks.
In Focus: Economic News, Earnings Data
As mentioned above, the ISM said its index of activity in the manufacturing sector rose to 48.9 in July from 44.8 in June, although a reading below 50 indicates a contraction. Economists had been expecting a more modest increase to a reading of 46.5.
Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee said, Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue.
Separately, the U.S. Commerce Department revealed that construction spending rose 0.3 percent in June following a revised 0.8 percent slide in May. The figure surprised economists, who had expected a decline of 0.5 percent for the month.
The report also said that that private construction slipped 0.1 percent, though residential construction spending was up 0.5 percent. The report also showed that public construction spending was up 1.0 percent.
With earnings season coming to a close, Humana reported second-quarter net income of $1.67 per share, compared to $1.24 per share in the same quarter of last year. Wall Street analysts expected the company to report earnings of $1.64 per share for the quarter.
Humana's total revenues for the quarter rose to $7.90 billion from $7.35 billion in the prior year quarter. Twelve analysts had a consensus revenue estimate of $7.77 billion for the quarter.
Tyson Foods reported third-quarter net income of $0.35 per share compared to $0.03 per share in the year ago quarter. Sales for the quarter totaled $6.66 billion, compared to $6.85 billion in the prior year quarter. Analysts had expected the company to report earnings of $0.22 per share on revenues of $6.68 billion.
In overseas trading, stock markets across the Asia-Pacific region finished Monday's trading mostly higher, with Hong Kong's Hang Seng Index posting a gain of 1.1 percent. Japan's benchmark Nikkei 225 Index bucked the uptrend, however, ending the day slightly lower.
The major European markets also closed notably higher, with the French CAC 40 Index and the German DAX Index posting gains of 1.5 percent and 1.8 percent, respectively, while the U.K.'s FTSE 100 Index rose by 1.6 percent.
In the bond markets, treasuries are seeing notable losses amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.645 percent, posting a gain of 14.4 basis points.
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