RTTNews - After seeing choppy trading for much of the session, stocks are moving mostly higher in mid-afternoon trading on Tuesday. Technology stocks have helped to lead the way higher, contributing to a particularly strong upward move by the tech-heavy Nasdaq.
The upward move may be partly due to optimism regarding news that 10 of the nation's largest banks are set to pay back $68 billion to the Treasury's capital purchase program. The news has generated some optimism about the outlook for the financial sector.
President Barack Obama praised the move, noting that the government has turned a profit from the first round of repayments. He also offered cautious optimism that the financial system is stabilizing,
While Obama said that the announcement that banks are relying less on Treasury assistance is welcome news, he said it does not excuse the actions of the banks.
The president also announced his intention to instate the pay as you go program, restricting the amount of money lawmakers can spend to only what they can save in other areas.
The major averages have continued to move higher in recent trading, reaching new highs for the session. The Dow is currently up 33.56 at 8,798.05, the Nasdaq is up 26.96 at 1,869.36 and the S&P 500 is up 7.78 at 946.92.
A majority of the Dow components are in the green, helping the blue chip index to post a mild gain in mid-afternoon trading.
The Dow is being buoyed by shares of American Express (AXP) and Intel (INTC), which are up by 4.3 percent and 3.9 percent, respectively. With the advance, the stocks are both moving to the upper end of recent trading ranges.
Strength is also visible in shares of Alcoa (AA) and DuPont (DD), which have climbed by 3.6 percent and 3.1 percent, respectively. Aluminum producer Alcoa continues to hover near its best intra-day level since early January, set last Friday.
On the other hand, the day's gains are being partly offset by a pullback by shares of Pfizer (PFE), which have fallen by 1 percent. The day's retreat has the stock slipping for the fourth day in a row and dropping to its worst level in just under a month.
Shares of Hewlett Packard (HPQ), Boeing (BA) and United Technologies (UTX) are also under pressure, backing off of the multi-month highs set in the previous session.
Most of the major sectors have moved higher over the course of the trading day, contributing to the upward move by the major averages.
Some of the day's best performances have come from networking stocks, with the Amex Networking Index showing a 2.6 percent gain in the mid-afternoon. The day's gain has lifted the index to its best intraday level in over eight months.
Semiconductor, steel, chemical and oil service stocks also continue to see notable upside in mid-afternoon dealing. Oil service stocks continue to be boosted by the price of oil, which has resumed its upward move on the day, climbing by $1.39, challenging the $70 a barrel mark.
On the other hand, health insurance stocks continue to exhibit weakness on the day, with the Morgan Stanley Healthcare Payor Index slipping by 1.6 percent on the day. With the pullback, the index is poised to end the session at its worst closing level in a month.
In Focus: TARP Payback, Geithner Testimony, Corporate and Economic News
The U.S. Department of Treasury announced Tuesday that 10 of the largest U.S. financial institutions borrowing money from the Treasury are planning on paying back their loans. Organizations such as JP Morgan Chase (JPM), U.S. Bancorp (USB) and Bank of New York Mellon (BK) will repay a total of $68 billion.
Speaking to U.S. lawmakers, Treasury Secretary Timothy Geithner said that he plans to begin the reform of the U.S. regulatory system soon. In the next few weeks we will outline a comprehensive plan of reform that will include systemic risk regulations to ensure that no large and interconnected firm or market can take on so much risk that its failure could destabilize the entire financial system, Geithner told a subcommittee of the Senate Appropriations committee.
On the economic front, wholesale inventories fell by a little more than expected in the month of April, according to a report released by the Commerce Department on Tuesday, with the report also showed a modest decrease in wholesale sales.
The report showed that wholesale inventories fell 1.4 percent in April following a revised 1.8 percent decrease in March. Economists had expected inventories to decrease by about 1.1 percent compared to the 1.6 percent drop originally reported for the previous month.
Additionally, the Commerce Department said that wholesale sales edged down 0.4 percent in April after falling by a more significant 2.4 percent in March. Wholesale sales were down 19.5 percent compared to the same month a year ago.
In corporate news, bankrupt automaker Chrysler's planned asset sale to a group led by Italian automaker Fiat was thrown into uncertainty after a U.S. Supreme Court Justice issued a stay on the sale. The stay was sought by a group of Indiana pension funds.
General Motors Corp. (GMGMQ.PK) also announced that Edward Whitacre Jr., former chairman and Chief Executive Officer of AT&T (T) will become chairman of the new GM when the company is re-launched later this summer. Kent Kresa will continue to serve as interim chairman until the launch.
Meanwhile, the Wall Street Journal reported that consumer goods giant Procter & Gamble (PG) is expected to name its Chief Operating Officer Robert McDonald as the new Chief Executive Officer, effective July 1, 2009.
In overseas trading, stock markets across the Asia-Pacific region finished Tuesday's session moderately lower. Japan's benchmark Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng closed down by 1.1 percent.
Meanwhile, the major European markets closed mixed for the session. The U.K.'s FTSE 100 Index drifted lower by less than a tenth of a percent and the German DAX Index fell by 0.1 percent, whereas the French CAC 40 Index finished up by 0.2 percent.
In the bond markets, treasuries are in positive territory after seeing some weakness following the day's action for three-year notes. Subsequently, the yield on the benchmark ten-year note is down to 3.87 percent, a drop of 1.9 basis points.
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