RTTNews - After moving lower at the opening bell, stocks are treading in negative territory in mid-morning trading on Monday, as traders are doing some profit taking following the recent run-up in equities. The major averages are all in negative territory, although only by modest margins.
The retreat comes amid a light day on the economic front as traders are looking forward to key economic reports later in the week, including data on retail sales, industrial production and weekly jobless claims.
In addition, the Federal Open Market Committee will make its interest rate announcement on Wednesday, with the key fed funds rate expected to remain unchanged amid a challenging economic environment.
In corporate news, Freddie Mac (FRE) said late Friday that it no longer needs government help at this point, as the mortgage lender posted a positive net worth.
Benefiting from accounting adjustments and gains, Freddie Mac reported a second quarter profit of $821 million on a notable increase in revenues to $7.47 billion from last year's $1.59 billion.
Warren Buffett-owned Berkshire Hathaway (BRKA) reported a 14 percent increase in second quarter earnings, fueled by gains from derivatives trading, which soared to $1.53 billion from $453 million in the second quarter of last year. The firm earned $1,147 per share, while Wall Street analysts expected the company to earn $1,238 per share for the quarter.
Microsoft (MSFT), which recently struck a ten-year deal with Yahoo (YHOO) to share search engine technology and ad revenue, announced an agreement with French ad company Publicis to sell its Razorfish digital advertising unit.
Meanwhile, McDonald's (MCD) announced that its global comparable sales rose 4.3 percent in July, benefiting from a 7.2 percent jump in sales in Europe. U.S. sales rose 2.6 percent primarily due to new products, including McCafé espresso-based coffees, and the continued strength of McDonald's core menu.
The major averages have moved roughly sideways since moving lower after the opening bell, lingering in the red. The Dow is currently down 30.91 at 9,339.16, the Nasdaq is down 6.54 at 1,993.71 and the S&P 500 is down 4.00 at 1,006.48.
Some of the day's weakest performances are being shown by housing stocks, with the Philadelphia Housing Sector Index posting loss of 2.4 percent in mid-morning dealing. The index is backing off of a ten-month closing high reached on Friday.
The index is being led lower by shares of Ryland Group (RYL), which are down by 5 percent. With the decline, the stock is pulling back off a three month closing high set late last week.
Weakness is also visible among resource stocks, with gold and steel stocks dragging the sector lower. The NYSE Arca Gold Bugs Index and the NYSE Arca Steel Index are down by 2.6 percent and 2.2 percent, respectively. The indices are extending their recent choppy performance amid the recent volatility in commodity prices on the NYMEX.
Commercial real estate, wireless and transportation stocks are also retreating, while electronic storage stocks are bucking the downtrend. The NYSE Arca Disk Drive Index is up by 2.3 percent, reaching its best intraday level in over ten months.
Further, healthcare provider and banking stocks are also on the rise, although by much more modest margins, helping to limit the pullback in the boarder markets.
Stocks Driven By Analyst Comments
Shares of MPS Group (MPS) are surging in mid-morning trading after being upgraded by Sun Trust to Buy from Neutral. The broker cited the pick up in job postings for the staffing firm as one of the reasons fro the ratings change. The stock has soared by 9 percent, reaching its best intraday price in over ten months earlier in the session.
Hewitt Associates (HEW) is also gaining following an upgrade at UBS, which raised its rating on the stock from Neutral to Buy. The stock is currently up by 3.5 percent, and at its high for the session, Hewitt was at its best level in over nine months.
On the other hand, W&T Offshore (WTI) is moving lower after BMO Capital Markets downgraded its rating on the company's stock from Market Perform to Underperform. The broker cited the firm's growth strategy and liquidity as a part of the reason for the downgrade. The stock has slipped by 4 percent but continues to hover near a seven week high.
In overseas trading, stock markets across the Asia-Pacific region largely turned in strong performances on Monday. Japan's benchmark Nikkei 225 Index rose by 1.1 percent, reaching a ten-month high, while Hong Kong's Hang Seng Index surged up by 2.7 percent.
Meanwhile, the major European markets are moving lower, with the French CAC 40 Index and the German DAX Index down by 0.7 percent and 0.9 percent, respectively, while the U.K.'s FTSE 100 Index is sliding by 0.3 percent.
In the bond markets, treasuries are little changed. Subsequently, the yield on the benchmark ten-year note is trading at 3.844 percent, posting a loss of less than a basis point.
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