After seeing considerable volatility earlier in the session, stocks are moving mostly higher in early afternoon trading on Wednesday. Nonetheless, the major averages currently continue to turn in a mixed performance.
Stocks moved sharply higher at the open on the heels of some better than expected employment data, but they were unable to sustain the initial upward move and showed a notable pullback over the course of the morning.
The initial strength came after Automatic Data Processing (ADP) released a report showing a continued decrease in private sector employment in the month of April, although the decrease in jobs was much smaller than economists had expected.
The report showed that non-farm private employment fell by 491,000 jobs in April following a revised decrease of 708,000 jobs in March. Economists had expected a decrease of 645,000 jobs compared to the loss of 742,000 jobs originally reported for the previous month.
While the data points to continued weakness in the labor market, it presents another sign that the economy is stabilizing and generated some optimism about the Labor Department's monthly employment report due to be released on Friday.
Nonetheless, traders were somewhat reluctant to continue buying stocks ahead of the release of the monthly employment report as well as the release of the results of the government's stress tests of the nation's leading financial institutions.
On the corporate front, shares of Disney (DIS) are seeing considerable strength after the entertainment giant reported adjusted second quarter earnings that came in above analyst estimates. Disney, a Dow component, is currently posting a 11.9 percent gain.
Disney reported adjusted second quarter earnings of $0.43 per share compared to analyst estimates of $0.40 per share. At the same time, the company said its revenue edged down 7 percent to $8.09 billion, slightly below analyst estimates of $8.15 billion.
In other news, a panel of experts called for the creation of a systemic risk regulator Wednesday as lawmakers examined the too big to fail problem.
Minneapolis Fed President Gary Stern and FDIC Chairwoman Sheila Bair told the Senate Banking Committee that the key to addressing TBTF is to substantially reduce the negative spillover effects stemming from the failure of a systemically important financial institution.
The major averages have shown a notable move to the upside in recent trading, although the Nasdaq remains modestly below the unchanged line. While the Nasdaq is down 2.76 at 1,751.36, the Dow is up 51.37 at 8,462.02 and the S&P 500 is up 9.03 at 912.83.
After helping to lead the markets higher in early trading, banking stocks continue to see significant strength in the early afternoon. With traders shrugging off concerns about the need for additional capital, the S&P Banks Index is currently up 8.3 percent.
Considerable strength is also visible among oil service stocks, as reflected by the 4.5 percent gain currently being shown by the Philadelphia Oil Service Index. At its high for the session, the index was at its best intraday level in almost seven months.
The gains by oil service stocks come amid a notable increase by the price of oil, with crude for June delivery currently up $2.07 at $55.91 a barrel. A report showing a smaller than expected increase in crude oil inventories contributed to the price increase.
Most other resource stocks are also moving higher amid a general uptrend in commodities prices. Natural gas stocks are posting particularly strong gains, resulting in a 4.8 percent gain by the Amex Natural Gas Index.
At the other end of the spectrum, housing stocks remain under pressure, with the Philadelphia Housing Index currently down 3 percent. Pulte Homes (PHM) and Centex (CTX) continue to turn in two of the sector's worst performances after reporting their quarterly results.
Healthcare provider stocks have also come under pressure over the course of the trading session, dragging the Morgan Stanley Healthcare Provider Index down 1.3 percent. Retail, biotechnology, and networking stocks are also posting notable losses
Stocks In The News
Among individual stocks, shares of Goodyear (GT) are seeing significant strength in early afternoon trading, with the tire maker currently up 12.9 percent after reaching its best intraday level in seven months.
The gain by Goodyear comes after the company announced an offering of approximately $500 million of 7-year senior notes. The company said it would use the proceeds to repay $500 million in senior floating rate notes due December 1.
Shares of Papa John's (PZZA) are also turning in a strong performance after the pizza chain reported better than expected adjusted first quarter earnings and reiterated its full year earnings guidance. Papa John's is currently up 7.7 percent after reaching a seven-month intraday high.
On the other hand, shares of Garmin (GRMN) are currently down 13.5 percent after the navigation device maker reported first quarter earnings that fell by much more than analysts had been expecting. The company's sales also came in below estimates.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Wednesday, although the Australian and South Korean markets bucked the uptrend. The Japanese market remained closed for the third straight day.
Notable strength was also visible in the European markets, although they closed off their best levels of the day. The U.K.'s FTSE 100 Index rose 1.4 percent, while the French CAC 40 Index and the German DAX Index advanced 1.8 percent and 0.6 percent, respectively.
In the bond market, treasuries are seeing some weakness, with the benchmark ten-year note pulling back near its lows in recent trading. Subsequently, the yield on the ten-year note is currently up 3.3 basis points at 3.19 percent.
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