RTTNews - Stocks remain mostly negative in early afternoon trading on Monday after profit taking stymied a rally seen on the heels of the release of new home sales data earlier. The major averages are all in negative territory by modest margins, giving back a small portion of their recent gains.

With new home prices moving back to the downside, the Commerce Department released a report showing that new home sales in the month of June increased by much more than economists had been anticipating. New home sales jumped by 11 percent, the sharpest increase in nearly nine years.

In earnings news, RadioShack (RSH), Tellabs (TLAB) and Corning (GLW) reported earnings that beat Wall Street estimates, while Verizon Communications (VZ) and Honeywell (HON) announced results that were in-line with expectations. Aetna (AET), however, was one of the major firms whose quarterly earnings fell well short of consensus.

The major averages are currently stuck below the unchanged line, although they are well off their worst levels of the day. The Dow closed down 28.79 at 9,064.45, the Nasdaq is down 8.55 at 1,957.41 and the S&P 500 is down 2.55 at 976.71.

Sector News

Airline stocks are turning in some of the day's weakest performances, as reflected by the 1.2 percent pullback by the NYSE Arca Airline Index. The day's retreat has dragged the index off of its best closing level in well over five months.

The index is being pulled down by shares of Ryanair (RYAAY), which are down by 6 percent. The move comes after the firm reported second quarter revenues that fell compared to last year while issuing a cautious outlook for the second half of the year.

Notable weakness is also visible among health insurance and railroad stocks, with the Morgan Stanley Healthcare Payor Index 1.8 and the Dow Jones Railroads Index down 1 percent. The healthcare index is moving off of its best closing level in nearly a month, while the railroads index is pulling back off its highest closing level in nearly eight months.

While networking, software, and wireless stocks also continue to drag down the tech-heavy Nasdaq, strength remains visible among banking, brokerage and housing stocks.

The Kbw Bank Index and the NYSE Arca Broker/Dealer Index are up by 2.7 percent and 1.6 percent, respectively. The brokerage index has risen to its best level in over eight months, while the banking index remains in a recent range.

Further, the Philadelphia Housing Sector Index is up by 1.8 percent, extending its gains for a fourth straight session to reach its best intraday level in over two months. Housing stocks were helped higher following the promising results of the day's new home sales report.

Stocks In The News

Shares of RadioShack are moving lower in early afternoon trading after the firm's second quarter revenues fell by 2.9 percent, coming in at $965.7 million compared to analyst estimates of $977.86 million. The stock has plunged by 6.9 percent, backing off of its best closing level in over nine months.

Corning is also under pressure despite reporting second quarter earnings and revenues that were better than analysts expected. The stock is down by 3.8 percent, falling away from its best price level in roughly ten months set on Friday.

On the other hand, shares of Varian (VARI) are soaring after reaching an agreement to be acquired by Agilent (A) for about $1.5 billion in cash. The stock is currently up by 29 percent, reaching its best intraday level in eleven months.

In Focus: New Home Sales, Earnings News

As mentioned above, data from the Commerce Department showed that new home sales rose to an annual rate of 384,000 in June from the revised May rate of 346,000. Economists had expected sales to rise to 352,000 from the 342,000 originally reported for the previous month.

The stronger than expected sales growth came amid a pullback in prices, with the median sales price of new houses sold in June falling 5.8 percent to $206,200 from $219,000 in the previous month. The median sales price had increased for two consecutive months.

In earnings news, Tellabs reported adjusted second quarter net earnings of $0.08 per share, compared to $0.04 per share in the same quarter last year. Total revenue declined to $385.4 million from $432.5 million in the same period a year ago. Wall Street analysts expected the company to report earnings of $0.06 per share on revenues of $381.34 million.

Verizon Communications announced adjusted second quarter net income of $0.63 per share, compared with $0.67 per share a year earlier. Analysts anticipated the company to report earnings of $0.63 per share.

Honeywell revealed second-quarter net income of $0.60 per share, compared to $0.96 per share in the same quarter of last year. The results came in line with analyst forecasts of $0.60 per share for the quarter.

Aetna reported adjusted second quarter net income of $0.68 per share, compared to $0.94 per share in the year-ago quarter. The results failed to meet Wall Street expectations, which called for quarterly earnings at $0.78 per share.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished on the upside on Monday. While Japan's benchmark Nikkei 225 Index posted a 1.5 percent gain, Hong Kong's Hang Seng Index rose by 1.4 percent.

The major European markets also ended the day higher after seeing some volatility. The German DAX Index rose by 0.4 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index both eked out gains of 0.2 percent.

In the bond markets, treasuries remain stuck in negative territory. Subsequently the yield on the benchmark ten-year note is trading at 3.713 percent, posting gain of 4.3 basis points on the day.

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