Stocks have shown a notable turnaround over the course of morning trading on Wednesday, with the major averages bouncing well off their lows for the session after seeing some initial weakness. The Dow and S&P 500 have shown strong upward moves, climbing into positive territory.
The initial weakness was partly due to a negative reaction to the latest batch of earnings news, which led to renewed concerns about the outlook for the economy. Intel (INTC) helped to lead technology stocks lower after reporting a notable decline in its first quarter earnings.
Intel reported first quarter net income of $0.64 billion or $0.11 per share, compared to $1.44 billion or $0.25 per share in the same period last year. The semiconductor giant also said its revenue for the quarter fell to $7.1 billion compared to $9.6 billion in the year-ago quarter.
Meanwhile, UBS (UBS) forecast a first quarter loss attributable to shareholders of almost 2 billion Swiss francs. UBS also said expects to reduce the number of its employees to about 67,500 in 2010 in order to cut costs.
On the economic front, the Labor Department said its consumer price index edged down 0.1 percent in March following a 0.4 percent increase in February. The modest decrease came as a somewhat of a surprise to economists, who had expected prices to edge up 0.1 percent.
Excluding food and energy prices, the core consumer price index rose 0.2 percent for the third consecutive month. Economists had been expecting a 0.1 percent increase in core prices.
At the same time, the New York Fed issued its regional manufacturing report for April, with its index of activity in the sector coming in at negative 14.7 compared to the previous reading of negative 38.2. Analysts were looking for a reading of negative 35.0.
The Federal Reserve's industrial production report showed that production fell 1.5 percent in March, while capacity utilization dropped to 69.3 percent. Economists expected industrial production to decline 0.9 percent in March, while capacity utilization was expected to come in at 69.6 percent.
In other economic news, mortgage application volume fell 11 percent last week, as refinance activity slid nearly 11 percent. The decline in applications comes despite a drop in interest rates across the board, which usually encourages mortgage activity.
Additionally, the Fed is due to release its Beige Book report at 2 pm ET. The report, a compilation of anecdotal evidence on economic conditions from each of the 12 Fed districts, is released about two weeks before the monetary policy meeting is held.
The major averages are currently turning in a mixed performance, with the tech-heavy Nasdaq stuck in negative territory. While the Nasdaq remains down 8.42 at 1,617.30, the Dow is up 21.82 at 7,942.00 and the S&P 500 is up 0.96 at 842.46.
While a number of sectors have moved higher over the course of the morning, significant weakness remains visible in the airline sector. The Amex Airline Index is currently down 2.3 percent, pulling back further off the nearly two-month closing high it set on Monday.
SkyWest (SKYW) is helping to lead the airline sector lower, with the regional airline currently down 15 percent. The loss by SkyWest comes after the company said that it now expects its first quarter results to be lower than it previously anticipated.
Brokerage, semiconductor, and oil stocks are also posting notable losses on the day. The Amex Securities Broker/Dealer Index is down 2.3 percent, while the Philadelphia Semiconductor Index and the Amex Oil Index are suffering losses of 2.1 percent and 1.5 percent, respectively.
On the other hand, housing stocks have moved sharply higher over the course of the morning, driving the Philadelphia Housing Index up 4.5 percent. At its high for the session, the index was at its best intraday level in over two months.
Railroad, real estate, and health insurance stocks are also seeing considerable strength, with the Dow Jones Railroads Index up 3.6 percent, while the Morgan Stanley REIT Index and the Morgan Stanley Healthcare Payor Index are up 1.9 percent and 1.5 percent, respectively.
Stocks Driven By Analyst Comments
Despite the recovery attempt by the broader markets, Amazon (AMZN) is down 2.9 percent on the day, pulling back further off the more than six-month closing high it set last Thursday. The loss comes after analysts at Benchmark initiated coverage of the online retailer with a Sell rating.
Additionally, Lamar Advertising (LAMR) is suffering a loss of 2.6 percent after being initiated at Underperform by Credit Suisse. The initiation came as analysts see significant downside risk based on a lack of visibility and the lagging nature of the outdoor medium.
Meanwhile, International Paper (IP) is up 21.2 percent on the day after being upgraded to Buy from Hold at Deutsche Bank. The upgrade came as analysts see the company's costs declining, meaning it should be able to generate about $1 billion in free cash flow this year.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. While the markets in Hong Kong and China closed higher, notable weakness was visible in Japan and South Korea.
The major European markets remain below the unchanged line but have come off their lows of the day, with the French CAC 40 Index and the U.K.'s FTSE 100 both down 0.6 percent, while the German DAX Index is down 0.2 percent.
In the bond market, treasuries are showing a lack of direction amid the volatility on Wall Street. Subsequently, the yield on the benchmark 10-year note is currently unchanged at 2.786 percent.
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