Stocks are showing notable weakness during mid-morning trading on Monday, as traders cash in on the market's recent gains amid some uncertainty about the impending earnings season. A number of big-name companies are due to release their results over the course of the week.
In corporate news, Express Scripts (ESRX), one of North America's largest pharmacy benefits management companies, announced the signing of a definitive agreement to acquire health insurer WellPoint's (WLP) NextRx subsidiaries for $4.675 billion.
Express Scripts noted that the transaction value includes consideration for the value of a future tax benefit for the company based on the structure of the transaction.
Meanwhile, the Treasury Department is directing General Motors Corp. (GM) to prepare for a bankruptcy filing by a June 1 deadline, the New York Times reported, citing unidentified people with knowledge of the plans.
Auto task force members held talks with General Motors officials last week and are expected to continue discussions this week, the report added.
The report specified that one plan under consideration would create a new company that would buy the good assets of the company almost immediately after the carmaker files for bankruptcy.
Meanwhile, as mentioned above, earnings season will start picking up steam later in the week, with financial giants Citigroup (C), JP Morgan (JPM), and Goldman Sachs (GS) among the companies that are due to release their quarterly results.
The release of results from Intel (INTC), Google (GOOG), and Johnson & Johnson (JNJ) will also impact market sentiment.
In recent trading, the major averages have well off their worst levels of the day, although they remain stuck in negative territory. The Dow is currently down 77.34 at 8,006.04, the Nasdaq is down 8.70 at 1,643.84 and the S&P 500 is down 4.44 at 852.12.
Semiconductor stocks are turning in some of the market's worst performances in morning trading, dragging the Philadelphia Semiconductor Index down 3.2 percent. With the loss, the index is pulling back well off the nearly six-month closing high it set on Thursday.
Within the semiconductor sector, MEMC Electronic Materials (WFR) is down 13.9 percent after the company said that it expects to report first quarter revenues of $214 million, consistent with its previous outlook that revenue could decline by as much as 50 percent from the fourth quarter.
Oil services, electronic storage, and natural gas stocks are also suffering considerable weakness, with the Philadelphia Oil Services Index down 3.2 percent, while the Amex Disk Drive Index and the Amex Natural Gas Index are posting losses of 2.8 percent and 2.7 percent, respectively.
Transportation, housing, and oil stocks are also posting notable losses on the day.
At the other end of the spectrum, gold stocks are turning in some of the best performances, with the Amex Gold Bugs Index seeing a gain of 2.9 percent amid an increase in the price of the precious metal.
Banking, health insurance, and brokerage stocks have also moved higher over the course of the morning. The Kbw Bank Index is up 3.6 percent, while the Morgan Stanley Healthcare Payor Index and the Amex Securities Broker/Dealer Index are posting gains of 2.3 percent and 1.2 percent, respectively.
Stocks Driven By Analyst Comments
Textron (TXT) is suffering a loss of 12.8 percent on the day after the stock was downgraded to Neutral from Outperform at Macquarie Capital. With the decline, the stock has pulled back well off of the nearly three-month closing high it set in the previous session.
The downgrade came after the sharp rise in the aerospace company's share price on market speculation that it may sell itself.
Additionally, Limited Brands (LTD) is suffering a loss of 5.7 percent after being downgraded to Hold from Buy at Citigroup. The downgrade came as analysts responded to the fact that the stock is up 36 percent in less than two months.
Meanwhile, Salesforce.com (CRM) is up 2 percent on the day after UBS upgraded the stock to Buy from Sell.
Overseas, while several of the major markets in the Asia-Pacific region remained closed for Easter Monday, most of the markets in the region that were open closed higher. The major European markets are all closed for the Easter Monday holiday.
In the bond market, treasuries are posting considerable gains, holding near their highs of the day. Subsequently, the yield on the benchmark 10-year note is down 6.1 basis points at 2.865 percent.
For comments and feedback: contact firstname.lastname@example.org