RTTNews - After moving lower at the opening bell, stocks have shown a notable turnaround over the course of the session and are posting modest gains in early afternoon trading on Tuesday. The major averages are all in positive territory, looking to build on yesterday's strong gains.
In economic news, 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.
Earlier, the Commerce Department released a report showing that personal spending increased by slightly more than expected in June, while personal income fell by more than expected.
On the earnings front, Centex (CTX) was one of the few bright spots among a slew of disappointing results that included Pulte (PHM), D.R. Horton (DHI), Archer Daniels Midland (ADM) and Tenet Healthcare (THC), among others.
The major averages have seen some further upside in recent trading, reaching new highs for the session. The Dow is currently up 24.79 at 9,311.35, the Nasdaq is up 2.29 at 2,010.90 and the S&P 500 is up 3.62 at 1,006.25.
Airline stocks are posting strong gains in early afternoon trading, as reflected by the 5.7 percent gain being shown by the NYSE Arca Airline Index. The advance has lifted the index to its highest intraday level in just over six months.
UAL Corp. (UAUA) is helping to lead the airline sector higher, with the parent of United Airlines currently up 18.1 percent. The gain by UAL comes after United reported an increase in its load factor for July.
Commercial real estate and gold stocks are also showing strong moves to the upside, with the Morgan Stanley REIT Index and the NYSE Arca Gold Bugs Index up by 5.2 percent and 2.2 percent, respectively.
The real estate index has risen to its best intraday level in eight months, while the gold index has climbed to its highest intraday level in two months. The strength among gold stocks come amid a continued increase by the price of the precious metal, which is up $7.40 at $964.90 an ounce.
While banking, biotechnology and housing stocks are also moving notably higher, modest weakness is visible among oil service, utility, and telecommunications stocks, limiting some of the day's upward move.
Stocks In The News
PHH Corp. (PHH) is on the rise in early afternoon trading after the firm reported second quarter net income of $1.91 per share compared to $0.30 per share in the year-quarter. Analysts expected the firm to earn $0.76 per share for the quarter. The stock is up 3.2 percent, reaching its highest intraday level in three months, and is poised to set a nearly fifteen-month closing high.
Vulcan Materials (VMC) is also moving higher following its second quarter results, which showed that the firm earned $0.20 per share, in-line with estimates. The stock is climbing by 4.6 percent, reaching a two-month intraday high.
On the other hand, UBS AG (UBS) is declining after the company said its second quarter loss was substantially wider than last year, dragged down by a variety of charges. The stock is down by 4.4 percent, backing away from a two-month closing high set on Monday.
In Focus: Economic Data, Earnings News
As mentioned above, the 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.
NAR noted that pending home sales haven't shown five consecutive monthly increases since July of 2003.
Separately, the Commerce Department said 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 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 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.
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.
The major European markets closed modestly lower, with the French CAC 40 Index and the U.K.'s FTSE 100 Index both finishing lower by 0.2 percent. Meanwhile, the German DAX Index posted a much more modest loss, falling by less than a tenth of a percentage point.
In the bond markets, treasuries are extending their losses after turning negative in mid-morning dealing. Subsequently, the yield on the benchmark ten-year note is trading at 3.7 percent, posting a gain of 6.1 basis points on the day.
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