RTTNews - Stocks are continuing to hug the unchanged line in mid-afternoon trading on Wednesday, showing little reaction to the optimism in the latest Federal Reserve minutes. With the trading day winding down, the major averages are poised for a lackluster finish following two days of notable declines.
The minutes of the Fed's August meeting indicated that the members of the Federal Open Market Committee are more confident that the economic downturn is ending and that growth is likely to resume in the second half of the year.
The committee members said that their projections for the second half of 2009 and for subsequent years had not changed appreciably since the June meeting, except that they now saw smaller downside risks.
Nonetheless, while the members saw signs of stabilization in consumer spending and housing, most agreed that the economy is likely to recover only slowly during the second half of this year and all saw it as still vulnerable to adverse shocks.
This morning's batch of economic reports also saw little reaction, with most traders looking past the data to Friday's employment report.
The major averages have continued to see choppy movement in recent trading, swinging between gains and losses. The Dow is currently up 4.61 at 9,315.21, the Nasdaq is up 3.76 at 1,972.65 and the S&P 500 is up 0.62 at 998.66.
Most of the Dow components are showing only modest moves, contributing to the lack of direction being shown by the blue chip index.
Nonetheless, shares of Coca-Cola (KO) have shown a strong upward move, with the beverage currently up 3.4 percent. With the gain, the stock has reached a one-month intraday high and is poised to close at its best price in five weeks.
Cisco (CSCO) and Hewlett Packard (HPQ) are also on the rise, although by more modest margins, advancing by 1.6 percent and 1 percent, respectively. While Cisco remains stuck in a recent trading range, Hewlett Packard continues to hover near last month's eleven-month closing high.
While American Express (AXP), 3M (MMM) and Travelers (TRV) are also on the rise, shares of Merck (MRK) are seeing a notable decline, falling 1.7 percent. Shares of Merck are moving further off the eleven-month closing high set late last month.
JP Morgan Chase (JPM) and Disney (DIS) are also moving lower, although they continue to drift near comparable multi-month closing highs.
Gold stocks continue to move significantly higher, with the NYSE Arca Gold Bugs Index posting a 7.5 percent gain in mid-afternoon trading. The strength in the sector comes as gold for December delivery closed up $22 at $978.50 an ounce.
Golden Star Resources, Ltd. (GSS) is leading the sector higher, posting a gain of 10.5 percent on the session. With the advance, the stock is poised to close at its best level in fourteen months.
Significant strength also remains visible among health insurance stocks, with the Morgan Stanley Healthcare Payor Index up by 4.1 percent, bouncing off of a three-week low set in the previous session.
While tobacco, telecommunications, oil and computer hardware stocks are also moving modestly higher, notable weakness remains visible among housing and commercial real estate stocks.
The Philadelphia Housing Sector Index and the Morgan Stanley REIT Index are sliding by 2.1 percent and 1.4 percent, respectively, moving further off their recent highs.
In Focus: Economic Data, Corporate News
Earlier in the day, the Commerce Department released a report showing that orders for manufactured goods increased by 1.3 percent in July following a revised 0.9 percent increase in June. Economists had expected orders to increase by 2.2 percent compared to the 0.4 percent growth originally reported for the previous month.
Separately, Automatic Data Processing, Inc. (ADP) said that non-farm private employment fell by 298,000 jobs in August following a revised decrease of 360,000 jobs in July. Economists had expected a decrease of about 246,000 jobs compared to the loss of 371,000 jobs originally reported for the previous month.
Meanwhile, a report from the Labor Department showed that productivity increased by 6.6 percent in the second quarter compared to the 6.4 percent increase that was reported last month. Economists had been expecting productivity growth to be unchanged at 6.4 percent.
Additionally, the Labor Department said that unit labor costs decreased by a revised 5.9 percent in the second quarter compared to the previously reported 5.8 percent drop.
In corporate news, video-game publisher Take-Two Interactive (TTWO) said Tuesday after the markets closed that it swung to a third quarter loss, as revenue dropped 68 percent from last year, when it benefited from the performance of its blockbuster title Grand Theft Auto IV.
Filtration systems maker Donaldson Co. (DCI) said that its fourth quarter profit declined by 51.5 percent from last year, hurt by restructuring expenses and the negative impact of foreign currency translation.
Meanwhile, London-based British Petroleum (BP) revealed that it has made a giant oil discovery at its Tiber Prospect in the deepwater Gulf of Mexico. The well was drilled in Keathley Canyon block 102.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Wednesday. Japan's benchmark Nikkei 225 Index closed down by 2.4 percent, and Hong Kong's Hang Seng Index fell by 1.8 percent.
The major European markets closed modestly lower, with the French CAC 40 and German DAX Index falling by 0.3 percent and 0.1 percent, respectively, while the U.K.'s FTSE 100 slipped by less than a tenth of a percent.
In the bond markets, treasuries are seeing notable gains amid the uncertainty on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.304 percent, posting a loss of 7.1 basis points.
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