RTTNews - Stocks have shown a lack of direction over the course of morning trading on Friday, with the major averages having difficulty sustaining any significant moves. The choppy trading comes as investors express some uncertainty about the outlook for the markets.
Before the start of trading, the Labor Department released a report showing that its consumer price index was unchanged in April after edging down by an unrevised 0.1 percent in March. The lack of growth in consumer prices came in line with the expectations of economists.
At the same time, the report showed that the core consumer price index, which excludes food and energy prices, rose 0.3 percent in April after rising 0.2 percent in each of the three previous months. Economists had expected core prices to edge up 0.1 percent.
Separately, the Reuters/University of Michigan consumer sentiment index rose to 67.9 in May following a reading of 65.1 for April. The index came in above analyst estimates for a reading of 67.0.
Additional economic data came from the Federal Reserve, which released a report showing industrial production fell 0.5 percent in April, following a revised 1.7 percent decrease in March. Economists had been expecting production to fall 0.6 percent.
Separately, the New York Federal Reserve said its index of regional manufacturing activity rose to a negative 4.6 in May from a negative 14.7 in April, although a negative reading still indicates a contraction in activity. The index had been expected to rise to a negative 12.0.
Meanwhile, earnings season is winding to a close, with retailer JC Penney (JCP) reporting first quarter earnings of $0.11 per share compared to$0.54 per share in the same quarter last year. The earnings edged out analyst estimates for earnings of $0.10 per share.
More retailer earnings came from Abercrombie & Fitch (ANF), which reported a first quarter loss of $0.31 per share compared to earnings of $0.69 per share in the year-ago quarter. Wall Street analysts had expected a net loss of $0.14 per share.
Elsewhere, in a speech before the Texas Bankers Association, Dallas Federal Reserve Bank Branch President Richard Fisher said the efforts of the Federal Reserve to restore stability to financial markets are showing signs of success.
Fisher said that Fed actions have succeeded in pulling the financial markets and the economy from the edge of the abyss. However, he predicted that positive growth would not resume until the beginning of 2010, adding that he would be surprised if the economy sees a positive GDP number before then.
In other news, insurer and financial services provider Hartford Financial (HIG) announced that it has received preliminary approval for a $3.4 billion participation in the Treasury's Troubled Assets Relief Program, or TARP. Lincoln National (LNC) also revealed that it received approval for a $2.5 billion participation in TARP.
The major averages have moved to the upside in recent trading and are currently all in positive territory. The Dow is currently up 46.68 at 8,378.00, the Nasdaq is up 12.90 at 1,702.11, and the S&P 500 is up 2.60 at 895.67.
Reflecting the lack of conviction being shown by traders, the major sectors are turning in a roughly mixed performance in mid-morning trading.
Nonetheless, significant strength has emerged among housing stocks, as reflected by the 2.6 percent gain currently being shown by the Philadelphia Housing Index. The index is moving further off the one-month closing low it set on Wednesday.
Standard Pacific (SPF) is turning in one of the housing sector's best performances, with the homebuilder currently up 6.2 percent. Hovnanian (HOV) and Ryland Group (RYL) are also posting strong gains.
Notable strength is also visible among transportation stocks, with the Dow Jones Transportation Average currently up 2.5 percent. Some computer hardware, health insurance, and wireless stocks are also turning in strong performances.
On the other hand, utilities stocks are posting steep losses, dragging the Dow Jones Utilities Average down 2.4 percent. The average is adding to the losses posted in the two previous sessions, moving further off its recent highs.
Some real estate, natural gas, and banking stocks have also come under pressure over the course of morning trading.
Stocks Driven By Analyst Comments
Shares of PetSmart (PETM) are seeing considerable upside following an upgrade to a buy rating from a neutral rating by Piper Jaffray. The stock has climbed by 5.6 percent, moving further off of a monthly low set on Wednesday.
Oil States International (OIS) are also climbing in morning trading after being upgraded by Credit Suisse from Neutral to Outperform. Shares have climbed by 4.5 percent on the upgrade, looking to challenge a four-month high reached late last week.
On the other hand, shares of Sealy (ZZ) are considerably lower in light of a downgrade by Stifel Nicolaus. The stock was downgraded to hold from sell, prompting some of the weakness on the day. Subsequently, shares have slipped 4 percent, dropping to late April levels.
In overseas trading, stock markets across the Asia-Pacific region finished mostly higher on Friday. Japan's benchmark Nikkei 225 Index rose 1.8 percent, while Hong Kong's Hang Seng Index climbed 1.5 percent.
Meanwhile, the major European markets are currently turning in a mixed performance. While the U.K.'s FTSE 100 Index is down 0.2 percent, the French CAC 40 Index and the German DAX Index are up 0.9 percent and 0.2 percent, respectively.
In the bond markets, treasuries have shown a notable move to the downside in recent trading, pulling back to new lows for the session. Subsequently, the yield on the benchmark ten-year note is up 4.4 basis points at 3.151 percent.
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