RTTNews - After moving modestly higher earlier in the session, stocks have slipped into negative territory, where they remain in early afternoon trading on Wednesday. The major averages are all in the red by notable margins, as selling pressure has picked up ahead of earnings season.
Dow component Alcoa (AA) is set to kick off earnings season when it reports it second quarter results after the close of trading today. The aluminum producer is expected to incur a loss in contrast to a year-ago profit.
In an interview with RTT News, Doug Nardi, portfolio manager at Legg Mason Investment Counsel said the current market is in search of some news that it can hang its hat on, but he doesn't expect that will come until some of the bellwethers report earnings next week.
The reports should be worth the wait though, with Nardi predicting earnings will at least meet expectations, if not beat expectations. Certainly that would take this market higher, he added.
Nardi also stands by his forecast that this market could be in the mid-teens in terms of returns by the end of the year, suggesting that earnings season will be a big step in that direction.
Ahead of the start of earnings season, the focus of the broader markets is likely to be on the Treasury Department's auction of ten-year notes amid the recent concerns over interest rates. The results of the auction will be revealed at 1 p.m. ET.
The major averages have seen some further downside in recent trading, falling to new lows for the session. The Dow is currently down 61.22 at 8,102.38, the Nasdaq is down 18.10 at 1,728.07 and the S&P 500 is down 10.69 at 870.34.
Metal stocks are showing notable weakness, extending their recent losing streak. Within the sector, gold stocks are declining by steep margins, with the NYSE Arca Gold Bugs Index falling by 5.5 percent. With the drop, the index is down to its worst intraday level in two months.
The losses by gold stocks come amid a notable decrease by the price of the precious metal, with gold for August delivery currently down $23.80 at $905.30 an ounce.
Steel stocks are retreating, with a 4.6 percent loss being posted by the NYSE Arca Steel Index. The day's pullback has dragged the index to its worst intraday level in over two months.
Health insurance stocks are also continuing to give back ground after yesterday's rally, with the Morgan Stanley Healthcare Payor Index dropping by 4.9 percent on the day.
While banking, networking and commercial real estate stocks are also slipping, pharmaceutical stocks are still showing strong gains on the day. Despite the 1.6 percent gain being shown by the NYSE Arca Pharmaceutical Index, however, it remains stuck in a recent trading range.
Stocks In The News
Websense (WBSN) is sliding in early afternoon trading as the company said it expects second quarter revenues to come in below analyst estimates. The stock has plunged by 13.9 percent, falling to its worst intraday price in three months.
Shares of Arena Pharmaceuticals (ARNA) are also falling after the firm announced it would offer 12.5 million shares of common stock at $4.17 per share. The stock is down by 13.5 percent, as the offering has sparked some concern over share dilution. With the decline, the stock is down to its lowest intraday level in a month.
On the other hand, Family Dollar Stores (FDO) is soaring following an earnings report that showed third-quarter net income of $0.62 per share, beating analyst estimates of $0.59 per share. The stock is surging up by 10.9 percent, rising to its best level in well over three weeks.
In Focus: Earnings News, Corporate Data
On the earnings front, restaurant operator Ruby Tuesday (RT) said Tuesday after the markets closed that its fourth quarter profit rose 3.7 percent from last year, as lower operating costs and expenses helped offset a 7.1 percent decline in revenue.
Today, Pepsi Bottling Group (PBG) reported adjusted second quarter net income of $172 million or $0.78 per share, compared to $174 million or $0.78 per share in the year-ago quarter. Analysts expected the firm to report earnings of $0.73 per share for the quarter.
In other news, internet search provider Google (GOOG) revealed that it is developing the Google Chrome Operating System in a bid to challenge the Windows Operating System of Microsoft (MSFT).
In overseas trading, stock markets across the Asia-Pacific region ended Wednesday's session lower. Japan's benchmark Nikkei 225 Index closed down by 2.4 percent, while Hong Kong's Hang Seng Index dipped by 0.8 percent on the day.
The major European markets also ended the day in the red. The French CAC 40 Index and the U.K.'s FTSE 100 Index fell by 1.3 percent and 1.1 percent, respectively, while the German DAX Index closed down by 0.6 percent.
In the bond markets, treasuries are seeing strong gains ahead of the day's ten-year note auction results. Subsequently, the yield on the benchmark ten-year note is trading at 3.399 percent, a loss of 6.1 basis points on the day.
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