Stocks are showing notable weakness during mid-morning trading on Friday, as investors take profits from the recent rally and digest some mixed economic news. With the decline, the Nasdaq has once again slipped below the unchanged line for the year-to-date period.
On the economic front, the Commerce Department released its report on personal income and spending in the month of February. While the report showed an increase in spending that came in line with estimates, income fell by a little more than expected.
The report showed that personal spending rose 0.2 percent in February following an upwardly revised 1.0 percent increase in January. The modest increase in spending came in line with the expectations of economists.
At the same time, the Commerce Department said that personal income edged down 0.2 in February after a downwardly revised 0.2 percent increase in the previous month. Economists had been expecting a slightly more modest 0.1 percent decrease.
The final reading of the Reuters/University of Michigan's consumer sentiment index for March was also released earlier, showing a revised reading of 57.3. Economists had expected the consumer sentiment index to be lifted to 56.8 from the mid-month reading of 56.6.
In other news, President Barack Obama is meeting today with the CEOs of JP Morgan (JPM), Citigroup (C), Goldman Sachs (GS) and other banks, as well as executives from industry associations, to discuss the economy and the administration's proposals to increase regulation of the financial system.
Additionally, President Obama will soon unveil the results of a federal examination of the restructuring plans from General Motors (GM) and Chrysler, a condition for the auto-makers to receive more government capital.
White House Press Secretary Robert Gibbs said the details would be announced before the President departs for the G20 Summit in London on Tuesday.
The President, as part of viability plans from both GM and Chrysler, is required by the 31st to give an update on those plans and where our government sees them, and we'll be doing that also in the next few days, Gibbs said.
The major averages pulled back to new lows for the session in recent trading, but they have regained some ground since then. The Dow currently remains down 128.39 at 7,796.17, the Nasdaq is down 29.14 at 1,557.86 and the S&P 500 is down 13.55 at 819.31.
Following the broad based strength that was seen in the previous session, the vast majority of the major sectors are moving back to the downside.
Some of the worst losses are coming out of the real estate sector, driving the Morgan Stanley REIT Index down 3.9 percent. Nonetheless, the index remains stuck in a recent trading range.
Within the sector, Macerich Co. (MAC) is posting one of the biggest losses, falling 6.5 percent after being downgraded to Sell from Neutral at Goldman Sachs. With the decline, the stock has fallen to its lowest intraday level in over a decade.
Goldman Sachs attributed the downgrade to Macerich's exposure to the weak housing markets in Arizona and Southern California. The company also has large near-term debt refinancing requirements, with 50 percent of its debt maturing in the next three years.
Oil services, software stocks and natural gas are also suffering considerable weakness on the day, with the Philadelphia Oil Services Index down 4.2 percent, while the Amex Software Index and the Amex Natural Gas Index are down 3.5 percent and 3.3 percent, respectively.
Stocks Driven By Analyst Comments
PPG Industries (PPG) is posting a loss of 6 percent after being downgraded to Neutral from Buy at Merrill/BofA. With the decline, the stock has pulled back well off of the month and a half closing high it set in the previous session.
The downgrade came as analysts believe demand for caustic soda is getting weaker, along with other business areas.
Additionally, Rowan (RDC) is also down 6 percent after Barclays downgraded the stock to Equal Weight from Overweight and cut its price target to $18 from $23. The downgrade came as Barclays analysts believe that Rowan's Gulf rig will experience significant downtime this year.
Meanwhile, 3Com(COMS) is posting a gain of 3.9 percent following an upgrade to Equal Weight from Underweight at Barclays. Its price target was also increased to $3.00 from $2.75.
The upgrade came as analysts see 3Com's non-China pipeline improving, making way for solid gross margin improvement.
In overseas trading, the stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index closed down 0.1 percent, Hong Kong's Hang Seng Index ended the day up 0.1 percent.
Meanwhile, the major European markets are all moving lower, with the U.K.'s FTSE 100 Index showing a loss of 0.9 percent, while the French CAC 40 Index and the German DAX Index are falling 2 percent and 2.1 percent, respectively.
In the bond market, treasuries are showing some strength but have come off their intraday highs. Subsequently, the yield on the benchmark 10-year note is currently down less than a basis point at 2.73 percent.
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