RTTNews - Stocks are experiencing another lackluster outing on Tuesday after seeing a notable pullback in the previous session. The major averages are on opposite sides of the unchanged line in early afternoon trading, with only the tech heavy Nasdaq holding onto a modest gain.
Trading has been marred by another day of low volume, with reaction to the morning's largely positive data on housing starts and producer prices mostly muted.
The equity markets have been in a range recently, as some traders have moved to the sidelines ahead of an expected calm summer season, prompting some of the sluggish trading seen in recent weeks.
In an interview with RTT News, Jeffrey Saut, chief investment strategist for Raymond James, stated that while he is not as wildly bullish as he was back in March, he still thinks it's a mistake to get too bearish
Saut also remarked on the current condition of the market, stating that it is stretched pretty tight and overbought, although he predicted that a performance derby could force portfolio managers to buy stocks right into the end of the quarter.
The major averages currently remain mixed, with the Nasdaq just above the unchanged line. While the Nasdaq is currently up 1.71 at 1,818.09, the Dow is down 27.88 at 8,584.25 and the S&P 500 is down 2.20 at 921.52.
The major sectors are roughly split, contributing to the day's mixed performance in the equity markets.
Leading the way higher are health insurance stocks, with the Morgan Stanley Healthcare Payor Index up by 3.3 percent in afternoon trading. The day's advance has helped to pull the index up off the six-week low set in the previous session.
Gold and airline stocks also continue to post notable gains on the day, with the NYSE Arca Gold Bugs Index and the NYSE Arca Airline Index up by 2.4 percent and 1 percent, respectively. The gains have helped the indices move off of the multi-week lows set in the previous session.
Railroad, steel, and computer hardware stocks are also moving mostly higher, although they have pulled back off their best levels of the day.
On the other hand, significant weakness has emerged among retail stocks, as reflected by the 2.3 percent loss currently being shown by the S&P Retail Index. With the loss, the index is moving further off the eight-month closing high set earlier this month.
Semiconductor and oil service stocks are also pulling back on the day, with the Philadelphia Semiconductor Index and the Philadelphia Oil Service Index falling by 1.2 percent and 1.1 percent, respectively.
Stocks In The News
Shares of Tyco Electronics (TEL) are climbing after the firm raised its financial outlook for the third quarter. The company now expects adjusted earnings of $0.10 to $0.17 per share compared to earlier estimates between $0.01 and $0.06 per share. The stock is up by 4.2 percent in afternoon trading after reaching its best intraday level in eight months earlier in the session.
Research In Motion (RIMM) is also rising following the firm's introduction of the BlackBerry Tour - a new 3G BlackBerry smartphone. Shares of the wireless communications giant are up by 3.3 percent, hovering near their best level in nearly nine months.
On the other hand, Capstone Turbine (CPST) is slipping after the firm reported a fourth quarter net loss of $11.9 million, wide than a year-ago loss of $9.9 million. The stock is downy by 17.8 percent, as traders have reacted negatively to the news.
In Focus: Economic Data, Earnings, Fed Buyback
Before the start of trading, a report from the Commerce Department showed that housing starts rose 17.2 percent to an annual rate of 532,000 units in May from the revised April estimate of 454,000. Economists had expected starts to rise to 485,000 from the 458,000 originally reported for the previous month.
While single-family starts showed a notable 7.5 percent increase in May, the jump in housing starts was due in large part to a 77.1 percent increase in buildings with five units or more.
Separately, the Labor Department revealed that producer prices rose 0.2 percent in May. This followed a 0.3 percent increase for April and came in below economist estimates of a 0.6 percent increase.
Core producer prices, which leave out the impact of volatile food and energy prices, edged down by 0.1 percent for May. In April, the figure was up by 0.1 percent.
Meanwhile, the Federal Reserve revealed that industrial production fell by 1.1 percent in May following a revised 0.7 percent decrease in April. Economists had been expecting production to fall 1.0 percent compared to the 0.5 percent drop originally reported for the previous month.
The report also showed that capacity utilization fell to 68.3 percent in May from a revised 69.0 percent in the previous month. The capacity utilization rate had been expected to slip to 68.4 percent from the 69.1 percent originally reported for April.
In corporate news, Best Buy (BBY) reported adjusted first quarter earnings of $0.42 per share compared to $0.43 per share last year. Wall Street analysts expected the firm to report earnings of $0.34 per share.
While the consumer electronics retailer reported better than expected first quarter earnings, it reaffirmed its full year earnings guidance. Subsequently, shares of Best Buy are down 6.2 percent on the news.
On the other hand, shares of La-Z-Boy (LZB) are up 22.5 percent after the furniture maker reported fourth quarter earnings of $0.10 per share compared to a loss of $0.09 per share in the same quarter last year. The earnings surprised analysts, who had expected the firm to post a loss of $0.11 per share.
In other news, the Federal Reserve continued its treasury buyback program Tuesday, completing its first quantitative easing move of the week. The New York Federal Reserve purchased $6.45 billion worth of securities with maturity dates ranging from May of 2012 to November of 2013.
The day's buyback saw a total of $31.32 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $162.97 billion since the program began on March 25th.
In overseas trading, stock markets across the Asia Pacific region ended Tuesday's trading on the downside. Japan's benchmark Nikkei 225 Index closed down by 2.9 percent and Hong Kong's Hang Seng finished down by 1.8 percent.
Meanwhile, the major European markets turned in a mixed performance. While the German DAX Index and the U.K.'s FTSE 100 Index both finished just above the unchanged line, the French CAC 40 fell by 0.2 percent on the day.
In the bond markets, treasuries have turned higher following the Fed's quantitative easing move. Subsequently, the yield on the benchmark ten-year note is down to 3.702 percent, a drop of 1.1 basis points on the day.
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