RTTNews - After a lackluster start to the session, stocks have surged higher and are posting notable gains in early afternoon trading on Monday, benefiting from a promising analyst outlook for the financial sector. The major averages are all in positive territory by considerable margins, looking to snap a streak of lackluster sessions.
Traders have largely gone bargain hunting after a notable pullback in the broader markets last week, positioning themselves for the influx of earnings and economic reports set to be released later this week.
Railroad operator CSX Corp. (CSX) is scheduled to report second quarter results after the closing bell. Analysts expect the company to report earnings of $0.69 per share for the quarter. Novellus Systems (NVLS) will also report is second quarter results after the markets close today.
In an interview with RTT News, Paul Mendelsohn, chief investment strategist at Windham Financial Services stressed that guidance will be in focus this earning season, as traders look for signs whether the economic recovery is going to materialize or be pushed out until 2010.
Mendelsohn added, My sense is that investors are going to come out.realizing that earnings improvements are going to be pushed off probably at the earliest into 2010.there's clearly going to be disappointment.
The Treasury Department's Treasury Budget for June is the lone economic report that is scheduled to be released today, with economists expecting a deficit of $77.5 million. The data is on tap for 2 p.m. ET.
The major averages have moved off of their best levels of the day in recent trading, although they remain firmly in positive territory. The Dow is currently up 113.66 at 8,260.18, the Nasdaq is up 21.14 at 1,777.17 and the S&P 500 is up 13.26 at 892.39.
Banking stocks continue to turn in some of the day's best performances, with the Kbw Bank Index currently up by 4 percent. With the gain, the index is moving further off the two-month closing low it set last week.
The sector is benefiting from positive comments from Meredith Whitney, who raised her rating on Goldman Sachs (GS) to Buy from Neutral. Whitney also said Bank of America (BAC) could provide value for investors.
Additionally, brokerage stocks are also posting strong gains, as reflected by the 2.2 percent gain being shown by the NYSE Arca Broker/Dealer Index.
Charles Schwab (SCHW) is turning in one of the sector's best performances, advancing by 3.4 percent on the day. With the gain, the stock is moving off of the three-month closing low it set on Friday, reaching its best intraday price in over a week.
Significant strength is also visible among commercial real estate, electronic storage, defense and semiconductor stocks. Notably, the Philadelphia Defense Sector Index and the Philadelphia Semiconductor Sector Index are both up by 1.8 percent.
Airline, software, steel and pharmaceutical stocks are also on the rise, reflecting the day's broad based gains. On the other hand, modest weakness is visible among trucking and gold stocks.
Stocks In The News
Shares of OSI Pharmaceuticals (OSIP) are surging in early afternoon trading after the firm, along with Genentech (DNA), announced that a pivotal Phase III study of Tarceva (erlotinib) extended overall survival in patients with advanced non-small cell lung cancer after initial chemotherapy. OSI Pharma is currently up 8.1 percent, reaching a one-month intraday high.
Philips Electronics (PHG) is also rising after the firm said it expects comparative performance to be better in the second half of 2009 after reporting second quarter earnings that were bogged down by one-time charges and lower sales. The stock is climbing by 6.4 percent, also reaching its best intraday price in a month's time.
Meanwhile, CIT Group (CIT) is plunging after revealing that it is in discussions with regulators seeking assistance to improve its liquidity measures in the near term. The firm also reportedly hired a law firm to explore a possible bankruptcy filing. Shares of the commercial financier are plummeting by 19.6 percent, falling to an historic intraday low.
In Focus: Earnings, Corporate News
In earnings news, industrial and construction supplies wholesaler Fastenal (FAST) reported second quarter earnings that fell to $0.29 per share from $0.51 per share in the year-ago quarter, coming in below analyst estimates of $0.33 per share.
Ahead of the results, Fastenal announced Friday that its board of directors authorized the repurchase of 2 million shares in the market.
Meanwhile, aluminum die-cast auto parts maker J. L. French Automotive Castings, whose major customers include General Motors and Ford (F), announced that it is filing for bankruptcy protection under Chapter 11 with the District Court of Delaware.
In overseas trading, stock markets across the Asia-Pacific region ended Monday's session firmly on the downside, with Japan's benchmark Nikkei 225 Index and Hong Kong's Hang Seng Index both falling by 2.6 percent.
Meanwhile, the major European markets closed firmly on the upside, with the German DAX Index and the French CAC 40 Index finishing up by 2.9 percent and 2.3 percent, respectively. The U.K.'s FTSE 100 Index also rose, posting a gain of 1.7 percent.
In the bond markets, treasuries are seeing modest weakness amid the day's gains in equities. Subsequently, the yield on the benchmark ten-year note is trading at 3.308 percent, rising by 1.3 basis points on the day.
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