RTTNews - After a lackluster outing ahead of the long weekend, stocks are showing considerable strength in mid-morning trading on Tuesday. The major indices opened lower but surged higher following a better than expected report on consumer confidence.
Consumer confidence showed a substantial improvement in the month of May, according to a report released by the Conference Board, with the consumer confidence index rising to its highest level in eight months.
The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month.
Meanwhile, a report released by Standard & Poor's showed that home prices continued to show record declines in the first quarter, with the data suggesting that the recent signs of stabilization in the housing market have not yet led to a turnaround in prices.
The report showed that the S&P/Case-Shiller U.S. National Home Price Index fell 19.1 percent in the first quarter compared to the same quarter a year ago. The decrease marked the steepest decline in the series' 21-year history.
S&P added that the 20-City Composite Home Price Index fell at an annual rate of 18.7 percent in March compared to economist estimates of an 18.4 percent decline. The 10-City Composite Home Price Index for March was down 18.6 percent year-over-year.
In corporate news, automaker General Motors may be placed in bankruptcy protection by the U.S. government this week.
Under the tentative bankruptcy plan, GM could receive just short of $30 billion in additional federal loans, pushing the government's investment in the automaker to nearly $45 billion. The capital injection is reportedly a starting point in discussions and could be modified.
In recent trading, the major averages have pulled back off their highs for the session, although they remain firmly positive. The Dow is currently up 157.46 at 8,434.78, the Nasdaq is up 43.16 at 1,735.17 and the S&P 500 is up 16.51 at 903.51.
Most of the major sectors have moved higher over the course of the morning after seeing some early weakness, contributing to the turnaround by the major averages.
Semiconductor stocks are turning in some of the day's best performances, as reflected by the 3.3 percent gain being shown by the Philadelphia Semiconductor index. With the climb, the index has moved to a three week high.
Notable gains are also visible among hardware stocks, with the Amex Computer Hardware Index rising by 3.6 percent on the day.
Commercial real estate stocks are also showing considerable strength on the day, with the Morgan Stanley Real Estate Index climbing by 4.2 percent.
Limiting some of the day's gains are losses by resource stocks, which enjoyed a considerable run-up last week. The Amex Gold Bugs Index is down by 1 percent, backing off of a 10 month high set on Friday.
The move comes as the safety play of investing in gold has been extinguished amid the interest in riskier investments on the day. Gold futures have plummeted in commodities trading on the NYMEX, falling more than $10 an ounce.
Stocks Driven By Analyst Comments
Despite the turnaround by the broader markets, shares of Monster Worldwide (MWW) are down 1.4 percent after Wachovia its rating on the company's stock based on a sluggish outlook for the firm's recovery. Wachovia changed its rating on the firm to underperform from market perform. With the decline, the stock has fallen to a one-month low.
First Solar (FSLR) is also down after the firm was downgraded to underperform by FBR Capital Markets. Subsequently, shares of the energy company are down by 3.5 percent in mid-morning dealing, pulling back further off a seven-month set posted last Wednesday.
On the other hand, Apple (AAPL) has risen by 5.5 percent after being upgraded based on the projected performance of the iPhone. Morgan Stanley raised its rating to overweight on the firm, saying sales of Apple's flagship phone device will boost its profits in the coming two years.
In overseas trading, stock markets across the Asia-Pacific region finished mostly lower on Tuesday. Japan's benchmark Nikkei 225 Index slipped by 0.4 percent and Hong Kong's Hang Seng Index fell 0.8 percent.
Meanwhile, the major European markets have turned higher after seeing some earlier weakness. The U.K.'s FTSE 100 Index is up 0.9 percent, while the French CAC 40 Index and the German DAX are advancing 0.8 percent and 0.7 percent, respectively.
In the bond markets, treasuries are currently showing modest weakness following some early strength. Subsequently, the yield on the benchmark ten-year note is currently up 1.1 basis points at 3.459 percent after reaching a low of 3.395 percent.
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