While stocks have regained some ground since moving sharply lower at the open, the major averages remain firmly in negative territory in mid-morning trading on Tuesday. The weakness in the markets is largely due to reaction to disappointing retail sales data.
Before the start of trading, the Commerce Department said that retail sales fell 1.1 percent in March following an upwardly revised 0.3 percent increase in February. The decrease came as a surprise to economists, who had expected sales to increase by 0.3 percent.
The unexpected drop in retail sales was partly due to a 5.9 percent drop in sales by electronics and appliance stores. Auto sales also showed a notable decrease for the month.
Noting that early year discounts are abating as the year progresses, Dan Greenhaus, equity strategist at Miller Tabak & Co. said, The conversation will again return to whether the consumer is in a place to pay full price for goods that were very recently 70-80 percent off.
Separately, the Labor Department said that its producer price index fell 1.2 percent in March compared to economist estimates of a flat reading. Core producer prices, which exclude food and energy prices, were unchanged compared to the previous month.
Meanwhile, in corporate news, Goldman Sachs (GS) reported a first quarter profit that rose year-over-year and came in well above analyst estimates, helped by strong revenue growth in its fixed income, currency and commodities businesses.
Goldman Sachs also said that it has commenced a $5 billion public offering of its common stock, which along with additional resources, may be used to repay TARP funds.
Additionally, Dow component Johnson & Johnson (JNJ) also released first quarter results that exceeded analyst estimates. The company posted earnings of $1.26 per share compared to the $1.22 per share that was anticipated.
In other news, investors are awaiting a speech from President Barack Obama. The economy will be the subject of the speech, with the president expected to give a recap of the economic progress the country has made so far.
The major averages have moved well off their worst levels of the day, although they continue to post notable losses. The Dow is currently down 72.72 at 7,985.09, the Nasdaq is down 11.66 at 1,641.65 and the S&P 500 is down 7.54 at 851.19.
While selling pressure has waned from earlier in the session, significant weakness remains visible in a variety of sectors. Tobacco stocks are turning in some of the market's worst performances, dragging the Amex Tobacco Index down 2.7 percent.
Within the tobacco sector, Reynolds American (RAI) is posting a notable loss, with the cigarette maker currently down 2.1 percent. With the loss, Reynolds is pulling back off the two-month closing high it set in the previous session.
Real estate, airline, and retail stocks are also suffering notable weakness during Tuesday's session. The Morgan Stanley REIT Index is down 2.1 percent, while the Amex Airline Index and the S&P Retail Index are posting losses of 1.6 percent and 1.5 percent, respectively.
At the other end of the spectrum, oil service and healthcare provider stocks have moved notably higher over the course of the morning. The Philadelphia Oil Service Index is up 2.9 percent, while the Morgan Stanley Healthcare Provider Index is showing a 2.7 percent gain.
Strength that has emerged in the trucking, natural gas, and semiconductor stocks has also helped to lift the major averages off their lows for the session.
Stocks Driven By Analyst Comments
Sanderson Farms (SAFM) is suffering a loss of 5.5 percent after the stock was downgraded to Neutral from Overweight at JP Morgan. The downgrade comes after a massive 102 percent rise from the stock's low in mid-November.
Meanwhile, Dr. Pepper Snapple (DPS) is posting a 2.2 percent gain after being upgraded to Neutral from Underweight at JP Morgan. The upgrade came as analysts expect improvement in the North American beverage environment to boost volumes during 2009.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Tuesday, with financial leading the way higher following the release of the better than expected results from Goldman Sachs.
Meanwhile, the major European markets are showing a lack of direction after posting notable gains earlier in the session. The U.K.'s FTSE 100 is posting a modest loss, while the German DAX and the French CAC 40 are up 1.2 percent and 1 percent, respectively.
In the bond market, treasuries are showing notable strength but have come off their highs of the day. Subsequently, the yield on the benchmark 10-year note is down 1.5 basis points at 2.828 percent after hitting a low of 2.81 percent.
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