RTTNews - Following a weak start to the session, stocks were able to stage a recovery in late morning dealing and are showing moderate strength in early afternoon trading on Wednesday. The major averages are all in positive territory by notable margins, building on yesterday's gains.
With no first-tier economic data on the day, traders looked to quarterly earnings from Hewlett-Packard (HPQ), Deere & Co. (DE) and BJ's Wholesale Club (BJ) that beat analyst estimates, moderating some of the day's pessimism.
After the closing bell today, traders will look to quarterly results from NetApp (NTAP), Limited Brands (LTD), and Harman International (HAR), among others.
On the corporate front, consumer electronics giant Sony Corp. (SNE) said that it has reduced the price of its PlayStation 3 videogame console by about 25 percent or $100 to $299, effective Tuesday. The company also unveiled a slimmer version of the PS3 with a 120GB Hard Disk Drive or HDD, which will be available for the same price beginning September 1.
In other news, Ellen Hughes-Cromwick, chief economist of Ford Motor Co. (F), was quoted as saying that economic indicators in the U.S are showing that a recovery is already underway and that auto sales seem to be stabilizing. Hughes-Cromwick also predicted that Ford would see an improvement in sales in 2010.
The major averages have pulled back off their best levels of the day in recent trading, although they remain firmly in positive territory. The Dow is currently up 64.09 at 9,282.03, the Nasdaq is up 9.17 at 1,965.09 and the S&P 500 is up 6.24 at 995.91.
The major sector indices have turned largely positive, contributing to the strength visible in the broader markets.
Significant strength has emerged in the resource segment, with oil stocks turning in some of the day's strongest performances. The strength in the sector comes as the price of oil has jumped $2.50 to $71.69 a barrel after a report showed a steep drop in oil inventories.
The NYSE Arca Oil Index is up by 1.7 percent, but it remains stuck in a recent range. The index is being helped by shares of Exxon Mobil (XOM), which are climbing by 2.1 percent. The climb is helping the stock to move off of the one-month closing low set on Tuesday.
While biotechnology and pharmaceutical stocks are also showing strong upward moves, commercial real estate stocks continue to post notable losses. The Morgan Stanley REIT Index is down 1.4 percent, moving further off the nine-month high set earlier this month.
The weakness among real estate stocks comes after the National Association of Realtors reported that its Commercial Leading Indicator for Brokerage Activity fell by 1.3 percent to 101.5 in the second quarter, the lowest since the first quarter of 1994.
Stocks In The News
La-Z-Boy Inc. (LZB) is surging higher in early afternoon trading after the firm reported first quarter net income compared to a net loss last year, surprising Wall Street analysts. The company also reported revenues that beat expectations and raised its guidance. The stock has jumped by 8.5 percent, reaching a ten-month intraday high.
Shares of Immucor (BLUD) are also moving higher after its board of directors authorized an additional 2 million common shares for repurchase, funding the program from cash on hand. The stock is advancing by 5 percent, challenging a three and a half month closing high set late last week.
On the other hand, Photronics (PLAB) is down 9.4 percent following an announcement that it expects its fourth quarter net loss to range from $0.09 to $0.15 per share compared to the estimated loss of $0.08 per share.
In Focus: Earnings News
As mentioned above, Hewlett-Packard reported third quarter earnings of $0.91 per share after the bell Tuesday, beating the consensus estimate of $0.90 per share. The company expects to report fourth quarter earnings of $1.12 per share compared to the forecast of $1.07 per share.
Deere & Co. reported third-quarter net income of $0.99 per share, compared with $1.32 per share in the same period last year. The results topped Wall Street estimates of $0.57 per share.
Deere's total net sales and revenues declined to $5.89 billion from $7.74 billion in the prior year quarter but still beat forecasts of $5.25 billion. Looking forward, Deere said it expects full year net income of $1.1 billion despite expectations for the largest single-year sales decline in at least 50 years.
BJ's Wholesale Club reported second quarter net income of $0.64 per share, compared to $0.61 per share in the prior year quarter. Analysts had expected the firm to earn $0.62 per share.
In overseas trading, stock markets across the Asia-Pacific region finished notably lower on Wednesday. Japan's benchmark Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng Index declined by 1.7 percent.
Meanwhile, the major European markets saw little change, with the French CAC 40 Index and the U.K.'s FTSE 100 Index finishing just below the unchanged mark, while the German DAX Index fell by 0.4 percent.
In the bond markets, treasuries are showing notable gains but have moved well off of their best levels, as equities have turned positive on the day. Subsequently, the yield on the benchmark ten-year note is trading at 3.470 percent, posting loss of 5.6 basis points.
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