RTTNews - After ceding their early gains, stocks are lingering in negative territory in early afternoon trading, despite the release of encouraging employment data earlier in the day. The major averages are all in negative territory, as some traders may be cashing in on recent gains.
Earlier, trader sentiment was lifted by a report from the Labor Department showing that first-time claims for unemployment benefits came in lower than expected in the week ended August 1st, offsetting some of the recent concerns about the outlook for the labor market.
On the earnings front, traders reacted to a mixed bag of quarterly results from Cisco Systems (CSCO), Sunoco (SUN), Comcast (CMCSA, CMCSK), News Corp. (NWS), DirecTV Group (DTV), among others, as earnings season winds to a close.
During the earnings season, a majority of companies were able to beat bottom line estimates via cost cutting measures, but most fell short of revenue estimates as the recession dampened product and service demand in the calendar second quarter.
Traders have also looked to a slew of monthly sales results from retailers such as Target (TGT), Walgreen Co. (WAG), BJ's Wholesale Club (BJ), JC Penney (JCP) and Saks (SKS).
The major averages have seen some downside in recent trading, with the Nasdaq hitting a new low for the session. The Dow is currently down 28.04 at 9,252.93, the Nasdaq is down 18.01 at 1,975.04 and the S&P 500 is down 5.57 at 997.15.
Biotechnology stocks are seeing notable weakness in early afternoon trading, as reflected by the 1.8 percent pullback by the NYSE Arca Biotechnology Index. With the decline, the index is pulling back further off the historic high it set on Monday.
Vertex Pharmaceuticals (VRTX) is helping to lead the sector lower, falling by 4.2 percent. The slide comes after the company reported a second quarter net loss that was wider compared to the same period last year and more substantial than analysts had expected.
Healthcare provider stocks are also continuing their disappointing outing, with the Morgan Stanley Healthcare Provide Index posting a loss of 3.1 percent. The index is pulling back further off the ten-month closing high it set on Monday.
Significant weakness also remains visible among airline stocks, as reflected by the 1.9 percent loss currently being shown by the NYSE Arca Airline Index, which is pulling back off the roughly six-month closing high it set in the previous session.
While oil service, wireless and steel stocks are also moving notably lower, commercial real estate and retail stocks are bucking the day's downtrend. The Morgan Stanley REIT Index is up by 1.4 percent, while the S&P Retail Index is up by 1.1 percent, with both reaching fresh multi-month highs earlier in the session.
Stocks In The News
Shares of MetroPCS Communications (PCS) are plunging after the firm reported second quarter net income of $0.07 per share, while analysts expected the company to report earnings of $0.14 per share. The stock is plummeting by 31.6 percent, falling to an historic intraday low.
Murphy Oil (MUR) is also moving lower following the release of a second quarter report that revealed revenues came in at $4.55 billion, compared to $8.34 billion in the year-ago period. The stock is down by 5.1 percent, backing further off a nearly two-month closing high set on Monday.
On the other hand, Activision Blizzard (ATVI) reported adjusted second quarter net income of $0.15 per share, beating estimates of $0.07 per share, while revenues came in roughly in line with expectations. The stock is advancing by 8.1 percent, setting a one-month intraday high.
In Focus: Employment Data, Earnings News
As mentioned above, the report from the Labor Department showed that initial jobless claims fell to 550,000 from the previous week's revised figure of 588,000. Economists had been expecting jobless claims to edge down to 580,000 from the 584,000 originally reported for the previous week.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, While the drop in initial claims is welcome, as the pace of firing seems to be slowing, the other data points still point to a difficult hiring environment.
Initial claims though do lead continuing claims and we'll see how long the transition is between a slowdown in firing to a pickup in hiring, he added.
In earnings news, Cisco reported adjusted fourth quarter net income of $0.31 per share, compared to $0.40 per share in the same quarter of last year. Wall Street analysts expected the company to report earnings of $0.29 per share.
Cisco CEO John Chambers also said the company saw a number of positive signs for the economy during the quarter.
Sunoco reported an adjusted second quarter net loss of $0.27 per share, compared to income of $0.52 per share in the year ago quarter. Analysts forecast a loss of $0.12 per share. Revenue for the second quarter fell 51 percent to $7.51 billion from $15.18 billion in the same quarter last year.
Comcast said its second quarter net income was $0.33 per share, compared to $0.21 per share in the prior year quarter. The firm surpassed the expectations of analysts, who forecast earnings of $0.26 per share.
Additionally, Comcast said its revenues for the quarter totaled $8.94 billion, compared to $8.55 billion in the prior year quarter. Twenty analysts had consensus revenue estimate of $8.86 billion for the quarter.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday, although the major markets in Japan and Hong Kong closed notably higher. Japan's benchmark Nikkei 225 Index rose by 1.3 percent, while Hong Kong's Hang Seng Index closed up 2 percent.
Meanwhile, the major European markets closed on the upside by moderate margins. The French CAC 40 Index and the German DAX Index finished up by 0.6 percent and 0.3 percent, respectively, while the U.K.'s FTSE 100 Index ended the day up by 0.9 percent.
In the bond markets, treasuries are continuing to see modest strength amid the pullback on Wall Street. Subsequently the yield on the benchmark ten-year note is trading at 3.750, posting a loss of 1.4 basis points.
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