RTTNews - Stocks are continuing to tread near the unchanged mark in mid-afternoon trading on Friday, as reaction to earnings and housing data has been relatively mild. The major averages are mixed, looking to snap four days of solid gains across the board.
Some upside was seen earlier in the afternoon, following reports that commercial lending giant CIT Group (CIT) is in talks with Goldman Sachs and JP Morgan Chase to secure financing after negotiations with the government to secure funding reached an impasse, signaling the likelihood of bankruptcy.
Earlier, reaction to earnings was largely subdued as a number of firms were able to beat estimates based on cost cutting measures rather than revenue growth.
Traders looked to results from Google (GOOG) and IBM Corp. (IBM), which firmly beat Wall Street estimates, while financial stalwarts Bank of America (BAC) and Citigroup (C) also bested forecasts, but by more modest margins. Conglomerate General Electric (GE) and toymaker Mattel (MAT) also surpassed expectations.
On the economic front, government data released earlier today showed that new home building activity picked up again in June, following up on a sharp jump seen in the previous month. A rise in permits pointed to signs of increased construction down the road as well - raising some hope that there is light at the end of the tunnel for the battered home building sector.
The major indices have moved sideways in recent trading extending their stay near the unchanged mark. The Dow is currently up by 22.82 points to 8,734.64, the Nasdaq is up by 1.41 points to 1,886.44, while the S&P is down by less than a point to 939.84.
Leading the Dow higher are shares of IBM Corp. which are up by 4.1 percent in mid-afternoon trading. The surge has helped the stock to extend its gains for the third straight session, boosting it to its best intra-day price in over nine months. The upward move was prompted by better than expected earnings results and an increase in the firm's full year guidance.
Dow components Cisco (CSCO) and Intel (INTC) are also posting strong gains, advancing by 2 percent and 1.1 percent, respectively. The advance has also helped the stocks to their best intra-day levels in over nine months.
Shares of JP Morgan Chase (JPM) and McDonald's (MCD) are helping the Dow higher, while a 5.5 percent retreat in shares of General Electric (GE) is limiting the gains in the blue chip index. The decline comes as the firm reported second quarter revenues that fell short of analyst expectations, although earnings figures edged out forecasts. The stock is pulling back off of a one month closing low set in the previous session.
Bank of America (BAC) is sliding by 2.1 percent despite reporting earnings that beat out estimates and revenues that came in-line with analyst expectations.
Disappointing performances are also being turned in by shares of Kraft Foods (KFT), Boeing (BA), Coca-Cola (KO), Disney (DIS) and Alcoa (AA), which are all retreating by more than 1 percent.
Steep losses have continued in commercial real estate and banking stocks, with the Morgan Stanley Real Estate Index and the Kbw Banking Sector Index dipping by 2.5 percent and 2.2 percent, respectively. The indices are both offsetting some of the gains posted during the broad-based rally seen this week.
Healthcare provider, defense and airline stocks are also showing weakness, while tobacco, gold, steel and railroad and housing stocks are on the rise.
Notably, the Dow Jones Railroad Index is up by 1.1 percent, extending its winning streak to the seventh straight session. The day's gain has also propelled the index to its best intra-day level in over six months.
The upward move in gold stocks has been precipitated by the rise in the price of the precious metal on the NYMEX, where it has advanced by $3.20 to $938.60 per ounce. Meanwhile, housing stocks are benefiting from the day's promising housing data, with shares of Radian Group (RDN) soaring by 9.3 percent.
In Focus: Earnings News, Housing Starts Data
As discussed earlier, traders delved into a slew of earnings results this morning, with Google Inc. (GOOG) posted adjusted second quarter net income of $5.36 per share, compared to $4.63 per share in the year-ago period. The results beat out analyst estimates of $5.09 per share.
Citigroup Inc. (C) reported that its second-quarter net income was $0.49 per share, compared to a loss of $0.55 in the same period last year. The results included an $11.1 billion pre-tax ($6.7 billion after-tax) gain associated with the Morgan Stanley Smith Barney joint venture transaction, which closed on June 1, 2009. The earnings report bested analyst forecasts of $0.37 per share.
Mattel Inc. (MAT) also surpassed Wall Street expectations, which looked for a breakeven figure per share. Mattel revealed a second-quarter net income of $0.06 per share, compared to net income of $0.03 per share in the same quarter of last year.
Traders also digested a report from the U.S. Commerce Department which revealed that housing starts rose 3.6 percent to an annual rate of 582,000 units in June from a revised pace of 562,000 units in the previous month.
Economists were expecting the figure to remain relatively stable with the pace of 532,000 units that was originally reported for May.
The report also showed that building permits, an indicator of future housing demand, climbed 8.7 percent to an annual pace of 563,000 from the revised May rate of 518,000.
In overseas trading, stock markets across the Asia-Pacific region closed higher on Friday, with Hong Kong's Hang Seng Index climbing by 2.4 percent while Japan's benchmark Nikkei 225 Index posted a much more modest gain of 0.6 percent.
The major European markets closed on the upside, with the German DAX Index finishing higher by 0.4 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 both rose by 0.6 percent.
In the bond markets, treasuries closed near their worst levels of the day. Subsequently, the benchmark ten-year note finished at 3.651 percent, posting a gain of 9.4 basis points.
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