After failing to sustain an initial downward move, stocks have shown a notable turnaround over the course of the trading day on Monday. The major averages have bounced well off their worst levels of the day and into positive territory.

The initial weakness came as traders expressed concerns about the economic impact of the recent swine flue outbreak, with travel-related stocks showing particularly steep declines.

While Hugh Johnson, chief investment officer for Johnson Illington Advisors told RTTNews that traders used the swine flu scare as an excuse to take some money off the table, he warned that a full blown epidemic could lead to a 10 to 15 percent correction.

Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season.

President Barack Obama said Monday that the spreading swine flu is something that should raise the country's state of alert but should not be seen as a cause for alarm.

As part of remarks made at the National Academy of Sciences, Obama said he is getting regular briefings on the situation and the public will be receiving regular updates.

In earnings news, telecom giant Verizon (VZ) reported first quarter net income of $0.58 per share, compared to $0.57 per share in the year-ago period.

Excluding special items, net income attributable to Verizon was $0.63 per share, compared to $0.61 per share in same quarter last year. On average, analysts expected the company to report earnings of $0.59 per share.

Meanwhile, Whirlpool Corp. (WHR) reported first quarter earnings of $0.91 per diluted share, compared to $1.22 in the prior year quarter. The company reported net sales of $3.57 billion, a decrease of 23 percent from $4.61 billion in the year-ago period.

In other news, General Motors (GM) presented its updated Viability Plan, which will focus on 4 core brands in U.S. to cut costs. The company also expects to reduce its U.S. dealer count to just over 3,600 by the end of next year.

The major averages have pulled back off their highs for the young session in recent trading and are currently just above the unchanged line. The Dow is currently up 18.88 at 8,0975.17, the Nasdaq is up 2.39 at 1,696.68 and the S&P 500 is up 0.04 at 866.27.

Sector News

While buying interest has remained somewhat subdued since the turnaround seen in morning trading, telecom stocks are turning in some of the best performances. The Amex Telecommunications Index is up 2.6 percent, hitting its best intraday level in nearly six months.

Healthcare, biotechnology, and pharmaceutical stocks are also posting substantial gains amid expectations that the companies could actually benefit from the need to treat those that have contracted the swine flue or to develop a vaccine.

The Morgan Stanley Healthcare Providers Index is currently up 3.2 percent, while the Amex Pharmaceutical Index and the Amex Biotechnology Index are up 2.1 percent and 1.6 percent, respectively.

At the other end of the spectrum, airline stocks continue to see significant weakness, as traders expect the flu scare to reduce global travel. The Amex Airline Index is currently showing a substantial decline, falling 8.2 percent.

Real estate, steel, and banking stocks also remain under pressure. The Morgan Stanley REIT Index is down 4.9 percent, while the Amex Steel Index is down 3.1 percent and the Kbw Bank Index is down 2.6 percent.

Stocks In The News

Qualcomm Inc. (QCOM) is posting a gain of 5.9 percent on the day following some strong guidance. With the advance, the stock has climbed to its highest level in seven months.

For the third quarter, the company anticipates GAAP revenues to be in the range of $2.4 to $2.6 billion and GAAP operating income is expected to be in the range of $0.55 to $0.65 billion. Non-GAAP operating income is expected to be in the range of $0.80 to $0.90 billion.

Analysts expect the company to report revenues of $2.35 billion for the third quarter. The company also raised its fiscal 2009 revenues outlook.

Additionally, Humana Inc. (HUM) is up 8.1 percent after the company reported first quarter net income of $1.22 per share, compared to $0.47 per share last year. On average, analysts expected the company to report earnings of $1.17 per share.

Revenues for the quarter, as well as second quarter and full-year guidance, all came in above estimates.

Meanwhile, Timken Co. (TKR) is down 10 percent after the company announced that it expects full year results excluding special items to be in the range of a loss $0.15 to a profit $0.15 per share. Analysts had expected the company to earn $0.78 per share for the year.

The company also reduced its quarterly dividend by 50%, declaring a quarterly cash dividend of $0.09 per share, payable June 2, 2009 to shareholders of record as of May 22, 2009.

Other Markets

In overseas trading, stocks markets across the Asia-Pacific region closed mostly lower on Monday amid concerns about the impact of the swine flu outbreak. The Japanese market bucked the downtrend, however, with the Nikkei 255 Index edging up 0.2 percent.

Meanwhile, the major European markets have climbed over the unchanged line after seeing weakness for most of the session. While the French CAC 40 Index is posting a modest gain, the U.K.'s FTSE 100 Index is up 0.3 percent and the German DAX Index is up 0.4 percent.

In the bond market, treasuries have come well off their highs of the session but remain positive. Subsequently, the yield on the benchmark 10-year note is down 1.3 basis points at 2.983 percent.

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