RTTNews - Stocks have seen little change in afternoon trading on Friday after being boosted early on by upbeat existing home sales data. The major averages are holding steadily in positive territory, poised to finish with gains across the board for the fourth straight session.
The early buying interest came as existing home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors, with the headline figure rising for the fourth consecutive month.
Traders also looked to remarks from Federal Reserve Chairman Ben Bernanke, who spoke about the recent financial crisis at the Kansas City Fed's annual conference in Jackson Hole, Wyoming earlier this morning. The Fed chief stated that global economies are stabilizing, although he said the recovery is likely to be slow, weighed down by the continuing high levels of unemployment.
On the earnings front, Gap Inc. (GPS), Ann Taylor Stores (ANN) and J. M. Smucker Company (SJM) reported earnings that beat Wall Street estimates on the bottom line.
The major averages have moved largely sideways in recent dealing, off their highs but still firmly positive. The Dow is currently up 130.36 at 9,480.41, the Nasdaq is up 22.39 at 2,011.61 and the S&P 500 is up 15.22 at 1,022.59.
Nearly all of the Dow components are on the rise, contributing to the triple digit gain being shown by the blue chip index in mid-afternoon trading.
Caterpillar (CAT) and Disney (DIS) are turning in two of the Dow's strongest performances, posting gains of 3.5 percent and 3.3 percent, respectively. With the gains, the stocks have almost completely offset their recent losses.
Shares of drug maker Merck (MRK) are also rising by a notable margin, advancing by 3.2 percent. The advance has propelled the stock to its best intraday price in ten and a half months.
The move comes after the firm said that the U.S. Food and Drug Administration and U.S. Centers for Disease Control and Prevention reaffirmed that its drug GARDASIL continues to be safe and effective, and its benefits continue to outweigh its risks. GARDASIL is for use in girls and women 9 to 26 years of age for the prevention of cervical, vulvar, and vaginal cancers.
Home Depot (HD), Boeing (BA), General Electric (GE) and United Technologies (UTX) are also seeing considerable upside along with a slew of others in the Dow. While the bulk of the stocks remain stuck in a range, United Technologies is poised to close at its best level in nearly eleven months.
Strong gains are visible in the defense sector in mid-afternoon trading, with the Philadelphia Defense Sector Index showing a gain of 3.2 percent. The jump has lifted the index to its best intraday level in nearly eight months.
The index is being led by shares of Gencorp (GY), which are surging up by 9.7 percent, reaching their best price in nearly ten months.
Further, housing stocks are continuing their strong performance, as reflected by the 3.1 percent gain by the Philadelphia Housing Sector Index. With the move, the index has offset nearly all of its recent losses, boosted by today's existing home sales data.
The resource sector also continues to rally, with oil, steel, natural gas and gold stocks all seeing strong moves to the upside. The upward move by resource stocks comes amid an increase in commodities prices, with oil up $1.09 at $74.00 a barrel and gold up $12.70 to $954.40 an ounce.
Transportation, banking, commercial real estate and telecommunication stocks are also on the rise, indicative of the broad based strength in the equity markets on the day.
In Focus: Economic Data, Earnings News
As mentioned above, the National Association of Realtors said that existing home sales rose 7.2 percent to an annual rate of 5.24 million units in July from a 4.89 million unit rate in June. Economists had been expecting a more modest increase to a 5.0 million unit rate.
NAR noted that the increase in sales was the largest monthly gain on record for the total existing-home sales series dating back to 1999. With the increase, existing home sales rose for the fourth consecutive month, the first four-month winning streak since June of 2004.
Traders have also looked to comments from Fed Chairman Ben Bernanke, who stated that economic activity appears to be leveling out, both in the United States and abroad, while adding that prospects for a return to growth in the near term appear good.
However, Bernanke warned that the recovery may be sluggish at first, with unemployment declining only gradually from high levels.
In earnings news, apparel retailer Gap Inc. reported second quarter net income of $0.33 per share compared to $0.32 per share in the year-ago quarter. Net sales decreased to $3.25 billion from $3.50 billion in the prior-year quarter. Wall Street analysts expected the company to earn $0.32 per share on revenues of $3.23 billion.
Ann Taylor Stores reported adjusted second-quarter net income of $0.06 per share along with net sales of $470.23 million, while analysts forecast earnings of $0.03 per share on sales of $472.21 million.
Jelly maker J. M. Smucker Company reported first-quarter net income of $0.83 per share, while net sales came in at $1.05 billion. Analysts expected the firm to earn $0.80 per share on revenues of $1.04 billion.
In overseas trading, stock markets across the Asia-Pacific region saw a mixed performance on Friday. Japan's benchmark Nikkei 225 Index slipped by 1.4 percent, while China's Shanghai Composite rose by 1.7 percent.
Meanwhile, the major European markets all closed substantially higher, with the French CAC 40 Index and the German DAX Index rising by 3.2 percent and 2.9 percent, respectively, while the U.K.'s FTSE 100 Index finished up by 2 percent.
In the bond markets, treasuries are continuing to see substantial weakness amid the strength on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.552 percent, posting a gain of 11.5 basis points.
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