RTTNews - Stocks are posting strong gains in mid-morning trading on Friday, benefiting from a positive reaction to the day's upbeat employment figures. The major averages are all in positive territory by notable margins, looking to offset the losses posted in the previous two sessions.
Initial upside came after the Labor Department released a report showing that the pace of job losses slowed by even more than economists had been anticipating in the month of July.
The report showed that non-farm payroll employment fell by 247,000 jobs in July following a revised decrease of 443,000 jobs in June. Economists had been expecting employment to fall by 325,000 jobs compared to the drop of 467,000 jobs originally reported for the previous month.
Additionally, the Labor Department said that the unemployment rate unexpectedly edged down to 9.4 percent in July from 9.5 percent in June. With the decrease, the unemployment rate fell for the first time since April of 2008.
In earnings news, American International Group (AIG) reported second-quarter adjusted net income of $2.57 per share, compared to a loss of $10.15 per share in the year ago quarter. Wall Street analysts expected the embattled insurer to earn $1.33 per share for the quarter. The profit was the first for the firm in seven quarters.
Meanwhile, Fannie Mae (FNM), the government-sponsored home mortgage finance company, reported a heavy loss for the second quarter on higher credit related expenses, impairments and fair value losses. Further, the company said it has applied for an additional $10.7 billion in aid from the federal government and is dependent on the continued support of the Treasury for operating its business.
Crocs Inc. (CROX), Hansen Natural Corp. (HANS), and AES Corp. (AES) largely beat estimates. Generally, companies have been able to surpass expectations on the bottom line via cost cutting, as revenue growth was limited by the recent economic conditions.
While the major averages have pulled back well off their best levels of the day, they are currently posting strong gains. The Dow is currently up 88.95 at 9,345.21, the Nasdaq is up 16.37 at 1,989.53 and the S&P 500 is up 9.02 at 1,006.10.
The major sectors are moving mostly higher, contributing to the solid gains visible in the equity markets.
Housing stocks are turning in some of the day's best performances early on, with the Philadelphia Housing Sector Index posting a gain of 2.6 percent in mid-morning trading. With the advance, the index has reached its best intraday level in ten months.
Beazer Homes (BZH) is helping to lead the sector higher, advancing by 12.6 percent after the homebuilder reported a considerably narrower third quarter loss.. The stock has been lifted to its best level in three months.
Railroad and commercial real estate stocks are also moving notably higher, with the Dow Jones Railroads Index and the Morgan Stanley REIT Index both up by 3.1 percent. The railroads index has risen to its best intraday level in nearly nine months, while the real estate index is looking to close at its highest level in nine months.
Banking, trucking, health insurance, airline and networking stocks are also advancing by significant margins, reflecting the day's broad based gains.
Meanwhile, gold stocks are bucking the day's uptrend, with the NYSE Arca Gold Bugs Index posting a loss of 1.6 percent on the day. The losses by gold stocks come as the price of the precious metal has fallen on the NYMEX, sliding by $2.50 to $959.00 an ounce.
Stocks Driven By Analyst Comments
Shares of Urban Outfitters (URBN) are on the rise in mid-morning trading after the stock was upgraded at Barclays Capital to Equal Weight from Underweight. The broker cited the firm's smaller than expected decline in second quarter comparable store sales as the reason for the ratings change. The stock is up by 5.9 percent, rising to a ten-month intraday high.
CSX Corp. (CSX) is also moving higher following an upgrade by Credit Suisse to Outperform from Neutral. The broker also raised its target price on the stock to $49 from $37. Share of the railway transportation firm are up by 4.6 percent, reaching their best intraday price in nearly nine months earlier in the session.
On the other hand, Thomson Reuters (TRI) is pulling back after the stock's rating was reduced to Underperform from Hold by Jefferies, which cited the firm's cost cutting measures as the reason for its second quarter performance. The stock is down by 2.1 percent, backing off of the more than eleven-month closing high set on Thursday.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan's benchmark Nikkei 225 Index rose by 0.2 percent, while Hong Kong's Hang Seng Index slipped by a substantial margin, posting a loss of 2.5 percent.
Meanwhile, the major European markets are moving notably higher, with the French CAC 40 Index and the German DAX Index up by 0.8 percent and 1.1 percent, respectively, while the U.K.'s FTSE 100 Index is up by 0.2 percent.
In the bond markets, treasuries are continuing to show notable weakness. Subsequently, the yield on the benchmark ten-year note is trading at 3.838 percent, posting a gain of 9.2 basis points.
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