RTTNews - Stocks are showing a lack of conviction in mid-morning trading on Tuesday, as low volume is limiting reaction to earnings and economic news. The major averages are currently in negative territory by modest margins, offsetting some of yesterday's strong gains.
On the economic front, pending home sales increased for the fifth consecutive month in June, according to a report released by the National Association of Realtors this morning, with the increase in pending sales exceeding economist estimates by a wide margin.
NAR said its pending home sales index jumped 3.6 percent to 94.6 in June from an upwardly revised reading of 91.3 in May. Economists had been expecting a much more modest increase by the index of about 0.7 percent.
Earlier, the Commerce Department released a report showing that personal spending increased by slightly more than expected while personal income fell by more than expected.
The report showed that personal spending rose 0.4 percent in June following a revised 0.1 percent increase in May. Economists had been expecting spending to increase by 0.3 percent compared to the 0.3 percent increase originally reported for the previous month.
At the same time, the Commerce Department said that personal income fell by 1.3 percent in June after increasing by a revised 1.3 percent in the previous month. The decrease compares to economist estimates of a 1.0 percent decline.
Subsequently, the report said that personal saving as a percentage of disposable personal income was 4.6 percent in June compared with 6.2 percent in May.
In earnings news, Pulte Homes (PHM) reported a second quarter net loss of $0.74 per share, compared to a net loss of $0.63 per share in the same period last year. Analysts had expected the company to report a loss of $0.57 per share for the quarter.
Pulte said total revenues for the quarter fell to $678.58 million from $1.62 billion in the prior year quarter. Analysts had consensus revenue estimate of $647.07 million.
Meanwhile, Centex (CTX) reported first-quarter net earnings of $0.68 per share, compared to a loss of $1.21 per share in the same quarter of last year. Total revenues were $574 million, down 49 percent from $1.13 billion in the year ago quarter.
Pulte and Centex shareholders are expected to vote on a merger between the two companies on August 18th after Pulte offered to buy Centex for $1.3 billion in stock in April. The move would create the largest homebuilder in the U.S.
Traders also delved into quarterly reports from D.R. Horton (DHI), Archer Daniels Midland (ADM) and Tenet Healthcare (THC), which all fell short of expectations on the bottom line.
The major averages are currently posting modest losses, with the Dow just below the unchanged line. The Dow is currently down 4.76 at 9,281.80, the Nasdaq is down 5.78 at 2,002.83 and the S&P 500 is down 1.68 at 1,000.95.
The major sectors are roughly split, contributing to the lack of conviction being shown by the broader markets.
Nonetheless, electronic storage are retreating by notable margins, dragging the NYSE Arca Disk Drive Index down 1 percent. The loss by the index comes after it ended the previous session at its best closing level in ten months.
While brokerage, oil service and trucking stocks are also moving to the downside, airline stocks are seeing notable strength. The NYSE Arca Airline Index is up 4.1 percent, rising to its highest intraday level in just over six months.
Biotechnology stocks are also seeing strength, with the NYSE Arca Biotechnology Index currently up 2.2 percent. The advance has propelled the index to a historic high, besting last year's levels.
Stocks Driven By Analyst Comments
Shares of the Barnes Group (B) are retreating in mid-morning trading after the stock was downgraded by Robert W. Baird from Outperform to Neutral. The broker cited a lack of demand for parts in the automotive and airplane sectors amid the tough economic climate. The stock is plunging by 5.8 percent, pulling back off its best closing level in nearly two months.
PharMerica Corp. (PMC) is also moving lower following a downgrade by Oppenheimer from Outperform to Perform. The broker also lowered its target price on the stock from $26 to $23. The stock is down by 6.8 percent after ending the previous session at a nine month closing high.
On the other hand, Dish Network (DISH) is on the rise after the stock was upgraded by Credit Suisse to Outperform from Neutral. The firm also raised its target price on the stock from $18 to $22. The stock is up by 4.3 percent, reaching its best intraday price in nearly three months.
In overseas trading, stock markets across the Asia-Pacific region finished Tuesday's trading on a mixed note. Hong Kong's Hang Seng Index posted a loss 0.1 percent, while Japan's benchmark Nikkei 225 Index ended the session higher by 0.2 percent.
Meanwhile, the major European markets are all pulling back, with the French CAC 40 Index and the German DAX Index down by 0.5 percent and 0.4 percent, respectively, while the U.K.'s FTSE 100 Index is falling by 1 percent.
In the bond markets, treasuries have given up their early gains on the heels of the day's housing data. Subsequently, the yield on the benchmark ten-year note is trading at 3.667 percent, posting a gain of 2.8 basis points on the day.
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