Stocks have shown a notable move to the downside over the course of morning trading on Friday, with the major averages pulling back firmly into negative territory after ending the previous session mixed. Nonetheless, selling pressure has remained somewhat subdued.
The weakness in the markets comes despite the release of some better than expected economic data, including a report from the Institute for Supply Management showing a bigger than expected increase in its index of activity in the manufacturing sector.
The ISM said its index of activity in the sector rose to 40.1 in April from 36.3 in March, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting a more modest increase to a reading of 38.4.
Separately, the Reuters/University of Michigan's consumer sentiment index for the month of April was unexpectedly upwardly revised to a reading of 65.1 from the previously reported reading of 61.9. The index was unexpected to be unrevised.
Some traders may be looking to cash in on the strong gains that were posted in the previous month, doing some profit taking going into the weekend.
On the earnings front, oil giant Chevron is moving modestly lower after reporting first quarter earnings that fell sharply year-over-year, although its earnings exceeded analyst estimates.
Chevron reported first quarter earnings of $1.84 billion or $0.92 per share compared to $5.17 billion or $2.48 per share in the year-ago quarter. Analysts had been expecting the company to report earnings of $0.81 per share.
In other news, St. Louis Federal Reserve Bank President James Bullard said reforming the financial system in the wake of the current crisis, including picking out what still works and what needs to be replaced, should take on a larger role for policymakers.
Speaking before the 119th annual Arkansas Bankers Association convention, Bullard said the problem is that large institutions are not too-big-to-fail but rather are simply too-big-to-fail quickly.
In the past few minutes, the major averages have edged up off their lows for the session, although they remain stuck in the red. The Dow is currently down 58.30 at 8,109.82, the Nasdaq is down 11.90 at 1,705.40 and the S&P 500 is down 5.55 at 867.26.
While the major sectors are turning in a roughly mixed performance, significant weakness has emerged in the semiconductor sector. The Philadelphia Semiconductor Index is currently down 1.9 percent after ending Thursday's trading at a six-month closing high.
The weakness in the semiconductor sector is partly due to a report from the Semiconductor Industry Association showing that semiconductor sales in the first quarter were down 30 percent year-over-year.
Real estate stocks are also seeing considerable weakness, dragging the Morgan Stanley REIT Index down 2.8 percent. Transportation, retail, and housing stocks are also under pressure.
On the other hand, steel stocks have shown a strong upward move over the course of the morning, with the Amex Steel Index currently up 2 percent. At its high for the session, the index was at its best intraday level in almost six months.
Airline, natural gas, and defense stocks are also posting notable gains, with the strength in the oil-sensitive airline sector coming in spite of a significant increase by the price of oil.
Stocks Driven By Analyst Comments
After posting a steep loss in the previous session, shares of Sepracor (SEPR) are seeing some further downside in morning trading, with the pharmaceutical company currently down 7.5 percent. With the loss, Sepracor has fallen to its worst intraday level in over three months.
The loss by Sepracor comes after Goldman Sachs downgraded its rating on the company's stock to Sell from Neutral. Goldman Sachs attributed the downgrade to concerns about the trend for Sepracor's prescription sleeping aid Lunesta.
Shares of Celgene (CELG) are also under pressure after Credit Suisse downgraded its rating on the company's stock to Neutral from Outperform. Celgene is currently down 5.5 percent after ending the previous session at a one-month closing high.
On the other hand, shares of Suncor Energy (SU) are currently up 3.3 percent after Goldman Sachs upgraded its rating on the energy company to Buy from Sell. Goldman Sachs cited improving oil sands economics and forecast higher crude oil prices in the second half of 2009.
In overseas trading, most of the markets across the Asia-Pacific region were closed for May Day, although the Japanese market remained open. Japan's benchmark Nikkei turned in a strong performance, ending the session up 1.7 percent.
While most of the European markets are also closed for the holiday, there is trading in London, with the U.K.'s FTSE 100 Index currently down 0.7 percent.
In the bond market, treasuries are seeing some weakness, although they have moved off their worst levels of the day in recent trading. Subsequently, the yield on the ten-year note is currently up 3.3 basis points at 3.157 percent.
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