RTTNews - After threatening to surrender early gains, stocks were boosted by better-than-expected data on manufacturing and construction spending in mid-morning trading on Monday. The major averages are all in positive territory by considerable margins, looking to build on last week's gains.
While the Institute for Supply Management released a report showing a continued contraction in manufacturing activity in July, the report also showed notable improvement in new orders and production.
The ISM said its index of activity in the manufacturing sector rose to 48.9 in July from 44.8 in June, although a reading below 50 indicates a contraction. Economists had been expecting a more modest increase to a reading of 46.5.
Separately, the U.S. Commerce Department revealed that construction spending rose 0.3 percent in June following a revised 0.8 percent slide in May. The figure surprised economists, who had expected a decline of 0.5 percent for the month.
The report also revealed that private construction slipped 0.1 percent, though residential construction spending was up 0.5 percent. The report also showed that public construction spending was up 1.0 percent.
With earnings season coming to a close, Humana (HUM) reported second-quarter net income of $1.67 per share, compared to $1.24 per share in the same quarter of last year. Wall Street analysts expected the company to report earnings of $1.64 per share for the quarter.
Humana's total revenues for the quarter rose to $7.90 billion from $7.35 billion in the prior year quarter. Twelve analysts had a consensus revenue estimate of $7.77 billion for the quarter.
Tyson Foods (TSN) reported third-quarter net income of $0.35 per share compared to $0.03 per share in the year ago quarter. Sales for the quarter totaled $6.66 billion, compared to $6.85 billion in the prior year quarter. Analysts had expected the company to report earnings of $0.22 per share on revenues of $6.68 billion.
After the closing bell, homebuilding stalwarts Centex (CTX) and Pulte Homes (PHM) are set to report their quarterly results.
In other news, the U.S. House voted overwhelmingly Friday to add another $2 billion in federal funds for the popular cash for clunkers program. The program is up for review by the Senate this week.
The major averages are currently posting strong gains, not far off their best levels of the day. The Dow is currently up 106.26 at 9,277.87, the Nasdaq is up 19.27 at 1,997.77 and the S&P 500 is up 13.22 at 1,000.70.
Resource stocks are turning in another strong performance, building on gains posted late last week. Steel stocks are seeing considerable strength, as reflected by the 5.4 percent gain being shown by the NYSE Arca Steel Index. With the climb, the index has reached its best level since mid-June.
The strength among resource stocks comes amid an increase in commodity price on the NYMEX, where oil has surged by $1.95 to $71.40 per barrel and gold has jumped by $3.89 to $957.50 per ounce.
Healthcare provider and transportation stocks are also moving notably higher, with the Morgan Stanley Healthcare Provider Index and the Dow Jones Transportation Index up by 2.9 percent and 2 percent, respectively.
The healthcare provider index has reached its highest level in over ten months, while the transportation index is at a seven-month high.
While electronic storage and housing stocks are also showing strong moves to the upside, health insurance stocks are bucking the day's uptrend, with the Morgan Stanley Healthcare Payor Index down by 1 percent. The index is continuing its retreat away from the nearly ten-month closing high set last week.
Stocks Driven By Analyst Comments
Shares of specialty retailer J. Crew (JCG) are gaining in mid-morning trading after being upgraded by Brean Murray from Hold to Buy. The stock is up by 3.5 percent, rising to its best level in eleven months.
Education Realty Trust (EDR) is also on the rise following an upgrade by KeyBanc Capital Markets from Hold to Buy. Shares of the real estate investment trust are posting a gain of 4.1 percent, rising to their highest price in roughly seven weeks.
Meanwhile, Burger King (BKC) is under pressure after JP Morgan Chase downgraded the stock from Overweight to Neutral while also lowering its target price from $21 to $19. The stock is down by 2.2 percent, pulling back off the three-week high set in the previous session.
In overseas trading, stock markets across the Asia-Pacific region finished Monday's trading mostly higher, with Hong Kong's Hang Seng Index posting a gain of 1.1 percent. Japan's benchmark Nikkei 225 Index bucked the uptrend, however, ending the day slightly lower.
The major European markets are also moving higher, with the French CAC 40 Index and the German DAX Index up by 2 percent and 1.9 percent, respectively, while the U.K.'s FTSE 100 Index is posting a gain of 1.7 percent.
In the bond markets, treasuries are seeing notable losses following the day's manufacturing and construction data. Subsequently, the yield on the benchmark ten-year note is trading at 3.624 percent, posting a gain of 12.3 basis points.
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