RTTNews - Stocks are showing a lack of direction after a strong open on Tuesday, with some traders taking shelter in the safety of government bonds. The major averages are turning in a lackluster performance amid another session that looks to be bogged down by low volume.
The Treasury Department recently revealed that 10 of the nation's largest financial institutions participating in the Capital Purchase Program are now eligible to pay back some of the funds. While the specific names were not revealed, the Treasury said it expects to receive $68 billion in funds.
Treasury Secretary Tim Geithner said, These repayments are an encouraging sign of financial repair but we still have work to do.
Later, trading could be impacted by additional comments from Geithner, who is scheduled to testify before the Senate Appropriations Committee regarding his department's budget. IRS Commissioner Douglas Shulman is also set to appear before the committee.
On the economic front, wholesale inventories fell by a little more than expected in the month of April, according to a report released by the Commerce Department on Tuesday, with the report also showed a modest decrease in wholesale sales.
The report showed that wholesale inventories fell 1.4 percent in April following a revised 1.8 percent decrease in March. Economists had expected inventories to decrease by about 1.1 percent compared to the 1.6 percent drop originally reported for the previous month.
Additionally, the Commerce Department said that wholesale sales edged down 0.4 percent in April after falling by a more significant 2.4 percent in March. Wholesale sales were down 19.5 percent compared to the same month a year ago.
In corporate news, bankrupt automaker Chrysler's planned asset sale to a group led by Italian automaker Fiat was thrown into uncertainty after a U.S. Supreme Court Justice issued a stay on the sale. The stay was sought by a group of Indiana pension funds.
Men's Wearhouse (MW) reported net earnings of $5.3 million or $0.10 per share for the first quarter, compared to $9.9 million or $0.19 per share in the prior year quarter. Wall Street analysts expected the company to report a loss of $0.01 per share for the quarter.
Meanwhile, the Wall Street Journal reported that consumer goods giant Procter & Gamble (PG) is expected to name its Chief Operating Officer Robert McDonald as the new Chief Executive Officer, effective July 1, 2009.
The major averages are currently turning in a mixed performance, with the tech-heavy Nasdaq holding onto a modest gain. While the Nasdaq is up 5.69 at 1,848.09, the Dow is down 18.74 at 8,745.75 and the S&P 500 is down 1.41 at 937.73.
Most of the major sectors are showing relatively modest moves, contributing to the lack of direction being shown by the broader markets.
Nonetheless, semiconductor stocks are posting strong gains, with the Philadelphia Semiconductor Index up by 2.3 percent on the day. With the gain, the index is hovering near its best levels since early October.
Texas Instruments (TXN) is helping to lead the way higher after raising its earnings and revenue guidance for the second quarter. Shares of Texas Instruments are up by 4.5 percent in mid-morning dealing after reaching their best intraday level in over eight months.
Oil service stocks are also showing strength on the day, with the Philadelphia Oil Service Index currently up 1 percent. The strength in the sector comes amid a notable increase by the price of oil, which has risen by more than $1 a barrel.
Meanwhile, weakness is visible among health insurance stocks, as reflected by the 1.9 percent pullback being shown by the Morgan Stanley Healthcare Payor Index. The move comes as the Obama administration's healthcare reform plans are expected to have an adverse effect on the bottom line of firms in the sector.
Some defense, real estate and banking stocks are also showing notable declines on the day. Dow component Boeing (BA) is helping to lead the defense sector lower, pulling back off the seven-month closing high set in the previous session.
Stocks Driven By Analyst Comments
Shares of trucking firm Forward Air (FWRD) are moving higher after being upgraded by KeyBanc Capital Markets from Hold to a Buy rating. KeyBanc attributed the upgrade to the firm's ability to further benefit from cost cutting measures. Forward Air is up by 4.2 percent after climbing to its best intraday level in just over six months earlier in the session.
Celadon (CLDN) is also seeing strength after the trucking stock was also boosted by an upgrade from KeyBanc Capital Markets, which raised its rating to Buy from Hold. Celadon is up by 4.5 percent after reaching its highest intraday price in just under seven months.
Shares of Safeway (SWY) are also seeing some strength after Jefferies upgraded its rating on the grocery store operator to Buy from Hold, citing improved pricing and traffic. Shares of Safeway are currently up 2.7 percent.
On the other hand, Jabil Circuit (JBL) is falling following a downgrade by Credit Suisse from Outperform to Neutral. The stock is down by 9 percent on the day, falling to its worst intraday level in over three weeks in earlier trading.
In overseas trading, stock markets across the Asia-Pacific region finished Tuesday's session moderately lower. Japan's benchmark Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng closed down by 1.1 percent.
Meanwhile, the major European markets continuing to drift higher. The U.K.'s FTSE 100 Index is up by 0.4 percent, while the French CAC 40 Index and the German DAX Index are rising by 0.2 percent and 0.4 percent, respectively.
In the bond markets, treasuries are showing moderate strength. Subsequently, the yield on the benchmark ten-year note is down to 3.838 percent, a fall of 5.1 basis points.
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