RTTNews - After a lackluster start to Tuesday's session, stocks came to life as traders reacted to an encouraging report from the housing sector. The major averages have all moved into positive territory, posting moderate gains in mid-morning trading.
With homebuyers responding to very favorable market conditions, including record low mortgage interest rates, a report released by the National Association of Realtors showed that pending home sales increased by much more than expected in the month of April.
The report showed that the pending home sales index rose 6.7 percent to 90.3 in April from a reading of 84.6 in March. Economists had been expecting a much more modest increase by the index of about 0.5 percent.
Later today, trading could be impacted by the release of reports on May auto sales from the major automakers, especially given the backdrop of General Motors' bankruptcy filing.
A day after GM filed for bankruptcy, the auto giant announced that it has entered into a memorandum of understanding with a buyer for its Hummer brand.
In other corporate news, financial services provider JP Morgan Chase (JPM) said Monday that it plans to raise around $5 billion in common equity as part of its effort to repay $25 billion of the capital it received from the federal bailout fund.
American Express (AXP) also revealed that it has commenced a public offering of $500 million of its common stock. Part of the funding is expected to go to a repurchase of $3.4 billion of preferred shares issued to the U.S. Treasury as part of the Capital Purchase Program.
Meanwhile, Barclays said Monday that Abu Dhabi government-owned International Petroleum Investment Co., or IPIC, has revealed its intention to sell 1.3 billion shares of Barclays. IPIC intends to use the money from the sale to buy energy assets as raw materials prices rebound.
In other news, shares of DeVry (DV) are moving higher after Standard & Poor's announced that the education company would replace General Motors in the S&P 500. Devry is currently posting a 4.7 percent gain.
The major averages are currently posting notable gains, although they have pulled back off their best levels of the day. The Dow is currently up 44.11 at 8,765.55, the Nasdaq is up 12.01 at 1,840.69 and the S&P 500 is up 4.69 at 947.56.
Housing stocks are turning in some of the day's best performances, bolstered by the day's data from the housing sector. Subsequently, the Philadelphia Housing Sector Index is up by 1.8 percent, partly offsetting some of its recent losses.
The index is being led higher by shares of Standard Pacific (SPF), which are up by 4.3 percent on the session. With the advance, the stock reached its best intra-day level in nearly seven months earlier in the session and looks to finish at its best level of the year.
Transportation stocks are also enjoying another strong outing, along with health insurance, steel, and gold stocks. The gains by gold stocks come as the price of the precious metal is up more than $2 an ounce.
Meanwhile, semiconductor stocks are sliding, as reflected by the 1.1 percent retreat being shown by the Philadelphia Semiconductor Index. With the decline, the index is backing off of its best closing level in nearly eight months.
Banking, commercial real estate, and natural gas stocks are also treading on the downside in mid-morning trading.
Stocks Driven By Analyst Comments
China Unicom (CHU) is on the rise after seeing its stock upgraded by UBS from Neutral to Buy. The stock is up by 10.3 percent, reaching its best intra-day level in well over seven months.
On the other hand, shares of Juniper Networks (JNPR) are moving to the downside following a downgrade by UBS to Neutral from Buy. The network provider is down by 4.6 percent, backing off of the eight month closing high set in the previous session.
Despite the strength that has emerged in the housing sector, Meritage Homes (MTH) is also sliding after being downgraded to Sell from Neutral by UBS. Shares of Meritage are down by 6.6 percent, slipping to the lower end of a recent trading range.
In overseas trading, stock markets across the Asia-Pacific region finished largely mixed. Japan's benchmark Nikkei 225 Index edged up by 0.3 percent, while Hong Kong's Hang Seng fell 2.6 percent.
The major European markets are also turning in a mixed performance. The French CAC 40 Index and the German DAX Index are up by 0.2 percent and 0.1 percent, respectively, while the U.K.'s FTSE 100 Index is sliding, down by 1.0 percent.
In the bond markets, treasuries have ceded some of their earlier gains but remain in positive territory. Subsequently, the yield on the benchmark ten-year note is trading at 3.696 percent, a drop of 1.9 basis points on the day.
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