RTTNews - Stocks are seeing moderate strength in mid-morning trading on Tuesday, as traders digest a string of better than expected economic reports. The major averages are all in positive territory, although they have seen limited reaction to the day's news amid another light trading session.
The Institute for Supply Management released a report showing that its manufacturing index jumped to 52.9 in August from 48.9 in July, with a reading above 50 indicating an expansion in the sector following eighteen consecutive months of contraction.
With the increase, the index rose to its highest level since June of 2007. On average, economists had been expecting a more modest increase by the index to a reading of 50.2, which would have still indicated modest growth in the sector.
Separately, pending home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors.
The report showed that the pending home sales index rose 3.2 percent to 97.6 in July from a reading of 94.6 in June. The increase, which exceeded economist estimates of 1.5 percent growth, lifted the index to its highest level since June of 2007.
Meanwhile, the Commerce Department released a report showing that construction spending fell 0.2 percent in July following a downwardly revised 0.1 percent increase in June. Economists had expected spending to fall 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.
In corporate news, online auction giant eBay (EBAY) announced that it has signed an agreement to sell its Skype communications unit for about $1.9 billion in cash and a $125 million note.
The major averages currently remain in positive territory, although they have pulled back well off their best levels of the day. The Dow is currently up 13.38 at 9,509.66, the Nasdaq is up 14.09 at 2,023.15 and the S&P 500 is up 2.23 at 1,022.85.
Steel stocks are turning in some of the day's strongest performances, as reflected by the 1 percent gain being shown by the NYSE Arca Steel Index. Despite the strong upward move, the index continues to show a zigzag pattern.
Strength is also visible in the semiconductor sector, with the Philadelphia Semiconductor Index up by 1.2 percent. The index has largely offset yesterday's losses, and at its highs for the session, it had been poised to set a fresh eleven-month closing high.
Electronic storage stocks are also contributing to strength in the tech sector, with the NYSE Arca Disk Drive Index posting a gain of 1.6 percent. The index continues to hover near an eleven-month closing high set last Friday.
Transportation, oil service, and housing stocks are also seeing some strength, but they largely remain stuck in recent trading ranges.
Meanwhile, brokerage and commercial real estate stocks have come under pressure, with the NYSE Arca Securities/Brokerage Index down 1.5 percent and the Morgan Stanley REIT Index down 2.3 percent.
The brokerage index is moving off of the eleven-month closing high it set on Monday, while the real estate index remain stuck in a recent trading range.
Stocks Driven By Analyst Comments
Intersil (ISIL) is moving higher in mid-morning trading after being upgraded by Oppenheimer to Outperform from Perform. The stock is up by 4.7 percent, reaching an eleven-month intraday high.
Coach (COH) is also seeing some strength following an upgrade to buy by Bank of America-Merrill Lynch. Shares of the handbag and accessories maker are up by 5.5 percent but remain stuck in a recent trading range.
On the other hand, American Axle (AXL) is retreating after being downgraded by Deutsche Bank from Buy to Hold. The broker said shares are fairly priced following the recent upward move. Shares of the car industry supplier are falling by 5.5 percent.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Tuesday. Japan's benchmark Nikkei 225 Index closed up 0.4 percent, although it was well off its best levels of the day.
Meanwhile, the major European markets are all moving lower, with the French CAC 40 Index sliding by 0.2 percent, while the German DAX Index and the U.K.'s FTSE 100 are down by 0.7 and 0.5 percent, respectively.
In the bond markets, treasuries have moved to the downside following the day's economic data. Subsequently, the yield on the benchmark ten-year note is trading at 3.436 percent, posting a gain of 3.5 basis points.
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