RTTNews - Following a roughly flat open, stocks are moving mostly higher in mid-morning dealing on Thursday, boosted by trader reaction to a string of encouraging economic reports. The major averages are turning in a mixed performance, however, as the Nasdaq underperforms.
While activity in the mid-Atlantic region's manufacturing sector has continued to contract in the month of June, the Federal Reserve Bank of Philadelphia released a report showing that the pace of contraction has slowed by much more than economists had been expecting.
The Philly Fed said its index of activity in the manufacturing sector rose to a negative 2.2 in June from a negative 22.6 in May, although a negative reading still indicates a contraction. Economists had been expecting a much more modest increase to a reading of negative 17.0.
Trader sentiment was further boosted by the release of the Conference Board's report on leading economic indicators for the month of May, which showed that its leading indicators index increased by a little more than economists had been anticipating.
The report showed that the leading indicators index rose 1.2 percent in May following an upwardly revised 1.1 percent increase in April. Economists had expected the index to increase by 1.0 percent, matching the increase originally reported for the previous month.
Earlier, traders digested employment figures released by the Labor Department that showed first time claims for the week ended June 13th came in at 608,000 compared to last week's revised figure of 605,000.
Some optimism was generated by a drop in continuing claims, which fell by 148,000 in the week ended June 6th, brining the total number of people continuing to file for unemployment benefits to 6.687 million. This marked the first drop in continuing claims since the week ended January 3rd.
Traders are also considering comments from Treasury Secretary Tim Geithner, who is testifying before the Senate Banking Committee on the details of the Obama administration's proposed regulatory reforms for the financial system.
While the Dow and the S&P 500 are currently holding onto notable gains, the Nasdaq has pulled back into the red. The Nasdaq is currently down 3.76 at 1,804.30, while the Dow is up 58.27 at 8,555.45 and the S&P 500 is up 5.41 at 916.12.
Benefiting from a positive reaction to the economic data, most of the major sectors have moved higher over the course of the morning.
Some of the day's best performances are being put forth by healthcare provider stocks, as reflected by the 2.9 percent gain being shown by the Morgan Stanley Healthcare Provider Index. The upward move has helped the index to move further off of its worst closing level in over one month, set earlier this week.
Significant strength is also visible among health insurance stocks, with the Morgan Stanley Healthcare Payor Index currently up 5 percent. The index continues to regain ground after showing a notable decline earlier this month.
Banking stocks are also rebounding, with the Kbw Bank Index up by 1.9 percent. With the climb, the sector is moving well off the six-week low set in the previous session. Tobacco and pharmaceutical stocks are also offsetting recent losses.
However, the day's gains are being limited by losses by semiconductor and housing stocks, with the Philadelphia Semiconductor Index and the Philadelphia Housing Sector Index dropping by 2 percent and 1.4 percent, respectively.
Stock Driven By Analyst Comments
Gentex (GNTX) is retreating in mid-morning trading after the firm saw its stock downgraded to neutral from outperform by Robert W. Baird, which cited limited potential in recovery. Shares of Gentex are down by 10.2 percent, continuing to move the stock away from their best closing high in over eight months, set late last week.
The 9 Limited (NCTY) is also declining following a downgrade by Oppenheimer to Perform from Outperform. The rating change comes as the firm has lost its license to run World of Warcraft, which is likely to impact its bottom line in the near future. Shares of the Chinese game operator are down by 3.9 percent, giving back some of their recent gains.
On the other hand, ArvinMeritor (ARM) is climbing after Goldman Sachs raised its rating on the stock to Buy from Neutral. Shares of the electronic vehicle parts supplier are up by 8.3 percent, hovering near a six-month set posted last week.
In overseas trading, stock markets across the Asia Pacific region ended Thursday's trading notably lower. Japan's benchmark Nikkei 225 Index closed down 0.8 percent, while Hong Kong's Hang Seng finished down 1.7 percent.
Meanwhile, the major European markets have turned to the upside, with the French CAC 40 Index and the German DAX Index up by 1.4 percent and 1 percent, respectively. The U.K.'s FTSE 100 Index is also moving higher, rising by 0.5 percent.
In the bond markets, treasuries are seeing notable weakness amid the stock market reaction to the positive economic data. Subsequently, the yield on the benchmark ten-year note is trading at 3.769 percent, an increase of 12.2 basis points on the day.
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