Stocks have shown a substantial turnaround over the course of morning trading on Wednesday, with the major averages bouncing well off their lows for the session and into positive territory after seeing some early weakness. The rebound comes as traders digest the latest earnings news.
The initial weakness in the markets was partly due to a negative reaction to quarterly results from Morgan Stanley (MS), which became one of the few major financial companies to report weaker than expected first quarter results.
Morgan Stanley reported a much wider than expected first quarter loss of $0.57 per share and revealed that it has slashed its quarterly dividend by 80 percent to $0.05 a share.
In other earnings news, Boeing (BA) reported first quarter net income of $610 million, down 50 percent from last year quarter's $1.21 billion. Revenues for the quarter rose 3 percent to $16.5 billion from last year's $15.99 billion.
Looking forward, the aerospace giant reaffirmed its full year revenue guidance but lowered its earnings guidance due to lower earnings at its commercial airplanes business.
Meanwhile, fast food giant McDonald's (MCD) reported first quarter net income of $0.87 per share, compared to $0.81 per share in the same quarter of last year, while analysts expected the company to report earnings of $0.82 per share.
Total revenues for the quarter were $5.08 billion, compared to $5.61 billion in the prior year quarter. Fifteen analysts had consensus revenue estimate of $5.19 billion for the quarter.
In other news, David Kellermann, the acting Chief Financial Officer of beleaguered Freddie Mac was found dead Wednesday morning. The death is an apparent suicide, several media outlets are reporting, although police have yet to confirm that Kellermann, 41, took his own life.
The financial head of the government-sponsored mortgage lender was found dead in his Hunter Mill Estates home in Fairfax County, VA early Wednesday. His wife reportedly alerted the authorities following the discovery of his body.
Kellermann was named acting CFO of Freddie Mac in September 2008, during the most serious financial and housing crises since the Great Depression.
The major averages have seen some further upside in recent trading, rising to new highs for the session. The Dow is currently up 66.75 at 8,036.31, the Nasdaq is up 23.14 at 1,666.99 and the S&P 500 is up 7.30 at 857.38.
Trucking stocks have helped to lead the markets back to the upside, with the Dow Jones Trucking Index currently posting a 5.1 percent gain. With the advance, the index has risen to its best intraday level in over three months.
Within the trucking sector, Ryder (R) is currently up 6.8 percent after the company reported adjusted first quarter earnings that fell year-over-year but came in above analyst estimates.
Significant strength has also emerged in the housing sector, as reflected by the 4.3 percent gain currently being shown by the Philadelphia Housing Index. At its high for the session, the index was a more than three-month intraday high.
Electronic storage, semiconductor, and airline stocks are also posting notable gains, with the Amex Disk Drive Index and the Philadelphia Semiconductor Index up 4.1 percent and 3.5 percent, respectively, while the Amex Airline Index posts a gain of 3.3 percent on the day.
At the other end of the spectrum, some weakness remains visible among pharmaceutical stocks, with the Amex Pharmaceutical Index currently down 2.1 percent. Some railroad and utilities stocks are also posting notable losses.
Stocks Driven By Analyst Comments
Brocade (BRCD) is posting a gain of 5.8 percent on the day after being upgraded to Buy from Neutral at Goldman Sachs. With the advance, the stock has risen to its highest level in over six and a half months.
The upgrade came as investors expect higher estimates and multiple expansion as Cisco pushes into the server market. Shares are still down 37 percent in 2009, leaving room for considerable upside as a result of an improved competitive position.
Additionally, Ford (F) is posting a gain of 12.9 percent following an upgrade to Buy from Neutral at Goldman Sachs based on structural changes in auto industry and improved 2009 sales expectations. The stock's price target was raised to $6 from $2.25.
Meanwhile, Prudential (PRU) is down 4.1 percent following a downgrade at Barclays to Underweight from Equal-weight. The downgrade was based on fears surrounding the company's book value.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. While notable strength was visible in South Korea, the markets in Hong Kong and mainland China experienced considerable weakness.
Meanwhile, the major European markets have shed earlier losses and moved into positive territory, with the U.K.'s FTSE 100 Index up 1 percent, while the French CAC 40 Index and the German DAX Index post gains of 1.4 percent and 1.7 percent, respectively.
In the bond markets, treasuries are pulling back sharply after a higher open. Subsequently, the yield on the benchmark 10-year note is up 4.9 basis points at 2.951 percent.
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