Stocks are seeing strength during mid-morning trading on Friday as investors respond well to more corporate earnings reports and data on durable goods orders and new home sales. Some investors are staying on the sidelines as they await details on the stress tests of major banks.
In economic news, new orders for durable goods fell by less than expected in the month of March, according to a report released by the Commerce Department, although the report also showed a notable downward revision to the growth seen in February.
The report showed that durable goods orders fell 0.8 percent in March following a downwardly revised 2.1 percent increase in February. Economists had expected orders to fall 1.5 percent compared to the 3.5 percent increase that had been reported for the previous month.
Excluding the transportation sector, durable goods orders fell 0.6 percent, compared to the 1.3 percent decline expected by economists.
Separately, while a report released by the Commerce Department showed a modest decrease in new home sales in the month of March, the annual rate of new home sales came in well above economist estimates due to an upward revision to February sales.
The report showed that new home sales fell 0.6 percent to an annual rate of 356,000 in March from a revised February rate of 358,000. Economists had expected new home sales to remain unchanged compared to the 337,000 originally reported for the previous month.
On the corporate front, Microsoft's (MSFT) third quarter earnings came in line with expectations excluding some special charges.
The software giant reported third quarter earnings of $0.33 per share, including two charges that reduced earnings by $0.06 per share. Analysts had expected Microsoft to earn $0.39 per share.
Additionally, Ford (F) reported first-quarter results that came in better than analysts had anticipated. The company reported an after-tax net loss of $0.75 per share, compared to a profit of $0.20 per share, a year ago.
On average, analysts expected the company to report a loss of $1.23 per share for the quarter. While the loss continues to indicate weakness in the auto sector, the stronger-than-expected result shows that improvements are being made at Ford.
In recent trading, the major averages have pulled back well off their best levels of the day, although they remain firmly positive. The Dow is currently up 69.29 at 8,026.35, the Nasdaq is up 18.78 at 1,670.99, and the S&P 500 is up 7.76 at 859.68.
Oil service stocks are turning in some of the best performances, contributing to a 4.2 percent gain by the Philadelphia Oil Service Index. At its high for the session, the index was at its best intraday level in over six months.
The strength among oil service stocks is partly due to a notable increase by the price of oil, with crude for June delivery currently up $1.61 at $51.23 a barrel. Schlumberger (SLB) is also helping to lead the sector higher after reporting better than expected first quarter earnings.
Gold stocks are also seeing notable strength as investors respond to a modest increase in the price of the precious metal. Subsequently, the Amex Gold Bugs Index is up 4.6 percent on the day.
Steel, networking, and housing stocks have also shown strong upward moves over the course of the morning. The Amex Steel Index is 3.6 percent, while the Amex Networking Index and the Philadelphia Housing Index are up 3.3 percent and 3.2 percent, respectively.
While chemical, retail, and healthcare stocks are also posting notable gains, brokerage stocks are bucking the uptrend, dragging the Amex Securities Broker/Dealer Index down 2.5 percent. The loss by the index comes after it ended the previous session at a more than five-month closing high.
Stocks Driven By Analyst Comments
While the broader markets are posting notable gains, there are some significant losers on the day. CIT Group (CIT) is suffering a 18.7 percent loss after being downgraded by three different brokerage firms. With the decline, the stock has fallen to its lowest level in a month and a half.
CIT was downgraded to Market Perform from Outperform at Keefe Bruyette, to Neutral from Outperform at Credit Suisse, and to Equal Weight from Overweight at Barclays Capital.
Additionally, Clear Channel Outdoor (CCO) is down 3.5 percent after being downgraded to Underperform from Buy at Jefferies & Co. The stock also had its price target slashed to $3 from $10.
Meanwhile, Research In Motion (RIMM) is posting a gain of 2.1 percent on the day after being upgraded to Buy from Hold at Citigroup. Citi analysts expect focus will shift over next few quarters back to RIM's unit growth rather than gross margins.
The company's aggressive promotions are expected to open new consumer adoption and accelerate mainstream adoption as opposed to being seen as high end.
In overseas trading, stock markets across the Asia-Pacific regions closed mostly lower on Friday, with Japan's benchmark Nikkei 225 Index closing down 1.6. Hong Kong's Hang Seng Index bucked the downtrend, however, edging up 0.3 percent.
Meanwhile, the major European markets are continuing to show strength, with the U.K.'s FTSE 100 Index up 2.4 percent, while the French CAC 40 Index and the German DAX Index are advancing 2.6 percent and 2.3 percent, respectively.
In the bond market, treasuries are suffering notable weakness, holding near their lows of the day. Subsequently, the yield on the benchmark 10-year note is up 5.4 basis points at 2.981 percent.
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