While stocks have shown some uncertainty over the course of the trading day on Wednesday, the markets are seeing notable strength in the early afternoon. The gains come as traders respond to some mixed corporate and economic news and await the minutes of the latest Federal Reserve meeting.
On the economic front, wholesale inventories fell by much more than economists had been expecting in the month of February, according to a report released by the Commerce Department, although the report also showed an increase in wholesale sales.
The report showed that wholesale inventories fell 1.5 percent in February following a revised decrease of 0.9 percent in January. Economists had expected inventories to fall by 0.6 percent compared to the 0.7 percent decrease originally reported for the previous month.
At the same time, the Commerce Department said that wholesale sales edged up 0.6 percent in February following a 2.4 percent decrease in January. The increase in sales came on the heels of seven consecutive monthly decreases.
Separately, the Mortgage Bankers Association revealed that its index of mortgage application volume rose 4.7 percent on a seasonally adjusted basis for the week of April 3rd following a 3 percent increase in the previous week.
Meanwhile, stocks saw some early strength as traders reacted positively to news that Pulte Homes (PHM) has agreed to acquire rival Centex Corp. (CTX) in a stock-for-stock deal. The deal is valued at $1.3 billion and will create the nation's largest homebuilding company.
Under the terms of the agreement, Centex shareholders will receive 0.975 shares of Pulte common stock for each share of Centex they own. Based on Pulte's closing price on Tuesday, the deal values Centex at $10.50 per share, a 38 percent premium to Centex's closing price.
Additionally, while Bed Bath & Beyond (BBBY) said its fourth quarter profit declined from last year, hurt by worsening economic conditions, the home furnishings retailer's earnings exceeded analysts' expectations as well as its own estimates.
Dow component Alcoa (AA) reported a $497 million net loss for the first quarter, hurt by the impact of the economic downturn on its core industrial and commercial markets as well as an historic decline in aluminum prices.
In recent trading, the tech-heavy Nasdaq has risen to a new high for the session and is currently up 26.49 at 1,588.10. The Dow is posting a more modest gain, up 49.30 at 7,838.86, while the S&P 500 is up 8.24 at 823.79.
While retail stocks are continuing to lead the markets higher, stocks in the airline sector are also showing considerable strength. The Amex Airline Index is posting 3 percent gain on the day, offsetting the loss that it posted in the previous session.
Within the airline sector, AMR Corp. (AMR) is turning in one of the best performances, rising 4.8 percent. With the advance, the stock has risen to its best intraday in over a month.
Networking, computer hardware, and semiconductor stocks are also posting significant gains, contributing to the strong upward move by the tech-heavy Nasdaq.
Most of the other major sectors are also moving higher in early afternoon trading, with considerable strength visible among natural gas, telecom, and trucking stocks.
At the other end of the spectrum, shares of healthcare providers continue to suffer some of the widest losses of the session, driving the Morgan Stanley Healthcare Provider Index down 1.6 percent on the day.
Within the sector, one of the worst performances is being show by Community Health Systems, Inc. (CYH), which is down 9 percent.
Notable losses by some banking and housing stocks are also limiting the upside for the broader markets. The Kbw Bank Index is currently down 1.4 percent, while the Philadelphia Housing Index is posting a 1.2 percent loss.
Stocks In The News
Ruby Tuesday Inc. (RT) is posting a substantial 56.6 percent gain on the day after the company released its third quarter results. With the advance, the stock has climbed sharply to its highest level in over six months.
The company reported net income for the third quarter of $0.09 per share, compared to $0.23 per share for the year-ago quarter. Excluding closure and impairment expenses, Ruby Tuesday would have earned $0.26 per share.
Additionally, Jos. A Bank Clothiers Inc. (JOSB) is up 17.2 percent after the company announced that its fiscal 2008 net income increased to $3.17 per share while analysts expected the company to report earnings of $3.08 per share.
Meanwhile, Ryder System, Inc. (R) is suffering a 17.8 percent loss after the company said it lowered its earnings guidance for the first quarter of 2009 primarily due to lower expected results in its Fleet Management Solutions business segment.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Wednesday following the weakness seen on Wall Street overnight. Japan's benchmark Nikkei 225 Index showed a notable decline, closing down 2.7 percent.
Meanwhile, the major European markets are continuing to show a mixed performance. The French CAC 40 Index and the German DAX Index are posting gains of 0.7 percent and 0.8 percent, respectively, while the U.K.'s FTSE 100 Index is down 0.1 percent.
In the bond market, treasuries have come well off their intraday highs but remain above the unchanged line. Subsequently, the yield on the 10-year note is down 4 basis points at 2.869 percent.
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