RTTNews - After moving lower at the opening bell, stocks continue to tread in negative territory in early afternoon trading on Friday, prompted by discouraging earnings from Microsoft (MSFT) and some profit taking following recent gains. While the Dow and the S&P 500 are down by modest margins, the tech-heavy Nasdaq is posting a notable loss.
Earlier, traders reacted to disappointing quarterly figures from Microsoft, which reported an annual drop in sales of Windows for the first time. Meanwhile, American Express (AXP), Amazon.com (AMZN), Black & Decker (BDK), Schlumberger (SLB) and others offered a mixed bag of results.
Traders largely shrugged off a mixed report from Reuters and the University of Michigan, which showed that their reading on consumer sentiment for the month of July was upwardly revised from the preliminary reading but still came in well below the previous month.
Meanwhile, Treasury Secretary Timothy Geithner is testifying before the House Financial Services Committee regarding financial service regulatory reform, with Federal Reserve Chairman Ben Bernanke also due to address lawmakers later in the day.
The major averages have seen some upside in recent dealing, although they remain in negative territory. The Dow is currently down 17.92 at 9,051.37, the Nasdaq is down 18.13 at 1,955.47 and the S&P 500 is down 3.28 at 973.01.
Tech stocks are seeing continued weakness in early afternoon trading, with semiconductor, networking, and software stocks posting particularly steep losses.
Outside the tech sector, notable weakness is also visible among retail stocks, as reflected by the 1.2 percent loss being posted by the S&P Retail Index. The day's retreat is pulling the index off its best closing level in over nine months.
Banking and railroad stock are also contributing to the weak outing in the broader markets, with the S&P Banks Index and the Dow Jones Railroads Index falling by 1.6 percent and 1.5 percent, respectively. While the banking index remains in a range, the railroads index is pulling back off an eight-month closing high.
Defense, tobacco, and commercial real estate stocks are showing notable moves to the downside, while airline and biotechnology stocks are bucking the day's downtrend.
The NYSE Arca Airline Index is rising by 2.9 percent and the NYSE Arca Biotechnology Index is gaining 1 percent. The airline index is poised to close at its best level in over five months, while the biotech index is looking to finish at its highest level in eleven months.
Stocks In The News
Shares of Riverbed Technology (RVBD) are plunging in early afternoon trading after the company's second quarter revenues fell short of expectations. The stock is down by 19.4 percent, pulling back off its best closing level in well over a year and falling to its worst intraday price in seven weeks.
Ericsson (ERIC) is also moving to the downside after the company reported a 56 percent drop in second quarter earnings, which were negatively impacted by losses from joint ventures and restructuring costs. The stock is sliding by 8.2 percent, falling away from the roughly nine-month closing high set in the previous session.
Meanwhile, shares of Con-Way (CNW) are surging following news that the company's second quarter earnings crushed estimates, coming in at $0.64 per share compared to estimates of $0.13 per share. The stock has jumped by 18.1 percent, reaching its best intraday level in over nine months earlier in the session.
In Focus: Earnings News, Consumer Sentiment
As mentioned above, Reuters and the University of Michigan said the consumer sentiment index for July came in at 66.0 compared to the preliminary reading of 64.6, although it remains below a reading of 70.8 for June. Economists had expected the index to be revised up to 65.0.
Meanwhile, Microsoft Corp. reported fourth quarter net income of $0.34 per share, compared to $0.46 per share in the same quarter of last year. The software giant said revenue for the quarter fell 17 percent to $13.1 billion, coming in below analyst estimates of $14.37 billion.
American Express reported adjusted second quarter net income of $0.27, edging out Wall Street expectations of $0.26 per share. At the same time, revenues for the quarter fell short of analyst estimates.
Separately, Amazon.com said that its net income for the second quarter fell to $0.32 per share from $0.37 per share in the year-ago quarter. The results came in-line with analyst forecasts, and although revenues rose by 14 percent, the quarterly sales failed to meet estimates.
In overseas trading, stock markets across the Asia-Pacific region finished on the upside on Friday. While Japan's benchmark Nikkei 225 Index posted a 1.6 percent gain, Hong Kong's Hang Seng Index rose by 0.8 percent.
Meanwhile, the major European markets closed on a mixed note, with the German DAX Index and the French CAC 40 Index finishing down by 0.4 percent and 0.2 percent, respectively, while the U.K.'s FTSE 100 Index rose by 0.4 percent.
In the bond markets, treasuries continue to see modest strength amid the pullback on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.67 percent, posting a loss of 3.3 basis points on the day.
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