After showing a notable decline earlier in the session, stocks continue to show considerable weakness during early afternoon trading on Friday. The weakness comes as investors react to some mixed economic news and take profits following the recent market rally.
In economic news, the Commerce Department released its report on personal income and spending in the month of February. While the report showed an increase in spending that came in line with estimates, income fell by a little more than expected.
The report showed that personal spending rose 0.2 percent in February following an upwardly revised 1.0 percent increase in January. The modest increase in spending came in line with the expectations of economists.
At the same time, the Commerce Department said that personal income edged down 0.2 in February after a downwardly revised 0.2 percent increase in the previous month. Economists had been expecting a slightly more modest 0.1 percent decrease.
The final reading of the Reuters/University of Michigan's consumer sentiment index for March was also released earlier, showing a revised reading of 57.3. Economists had expected the consumer sentiment index to be lifted to 56.8 from the mid-month reading of 56.6.
In other news, President Obama outlined a stronger, smarter and comprehensive strategy to deal with escalating problems in Afghanistan and neighboring Pakistan. Speaking earlier, Obama pledged to send an additional 4,000 troops to help stabilize the region.
Obama also issued a dire warning that al Qaeda is planning attacks on the United States from Pakistan. Allowing al Qaeda to go unchallenged in Afghanistan would open up that country as a terrorist base once again, he said in prepared remarks.
In order to prevent that, Obama said that his administration has a clear and focused goal: to disrupt, dismantle, and defeat al Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future.
Additionally, Obama is meeting today with the CEOs of JP Morgan (JPM), Citigroup (C), and Goldman Sachs (GS) as well as executives from industry associations, to discuss the economy and the administration's proposals to increase regulation of the financial system.
The major averages have moved to the downside in recent trading, although they remain well off their worst levels of the day. The Dow is currently down 121.78 at 7,802.78, the Nasdaq is down 27.10 at 1,559.90 and the S&P 500 is down 12.12 at 820.74.
As the broader markets continue to suffer significant weakness on the day, most of the major sectors are showing notable moves back to the downside.
Software stocks are helping to lead the way lower during early afternoon trading. The weakness in the sector has driven the Amex Software Index down 3.6 percent, well off the nearly five-month closing high it set in the previous session.
Within the sector, Tibco Software (TIBX) is posting a notable loss after the company reported first quarter results that included weak revenue. Tibco stock is down 4.9 percent on the day.
Natural gas, oil services, and gold stocks are also posting notable losses on the day amid decreases in their related commodities prices. The Amex Natural Gas Index is down 3.8 percent, while the Philadelphia Oil Services Index and the Amex Gold Bugs Index are posting losses of 3.5 percent and 2.7 percent, respectively.
Significant weakness is also visible in a variety of other sectors, with stocks in the real estate, tobacco, and trucking sectors posting substantial losses.
Stocks In The News
Accenture Ltd. (ACN) is posting a loss of 13.6 percent on the day after the company provided disappointing guidance for the third quarter and full year 2009. With the decline, the stock has pulled back well off of the one and a half month closing high it set in the previous session.
For the third quarter, the company said it expects net revenues in the range of $5.1 to $5.3 billion. Wall Street analysts expect revenues of $5.77 billion. For the full year, the company expects earnings in the range of $2.60 to $2.67 per share compared to estimate of $2.79 per share.
Additionally, Masco Corp. (MAS) is down 4.1 percent after the company slashed its quarterly dividend to 7.5 cents from 23.5 cents in an effort to save on costs in the unsettling global conditions.
Meanwhile, Plantronics Inc. (PLT) is posting a gain of 14.1 percent after the company said it plans to outsource production of Bluetooth headsets to an existing supplier in China to improve profitability. The company said approximately 670 positions, primarily in China, would be affected by the announcement.
In overseas trading, the stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index closed down 0.1 percent, Hong Kong's Hang Seng Index ended the day up 0.1 percent.
Meanwhile, the major European markets are continuing to show weakness. The U.K.'s FTSE 100 Index is posting a 0.3 percent loss, while the French CAC 40 Index and the German DAX Index are down 1.9 percent and 1.2 percent, respectively.
In the bond market, treasuries are continuing to show some strength, driving the yield on the benchmark 10-year note down 1.4 basis points to 2.719 percent.
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