RTTNews - Following a shaky start, stocks are showing a lack of conviction in mid-morning trading on Wednesday. The major averages have been bouncing back and forth across the unchanged line, as the day's trading is being slowed yet again by low volume characteristic of the summer season.

Earlier, traders digested a report on consumer prices from the Labor Department that showed a modest increase in the month of May, with the mild price growth coming in below the expectations of economists.

The data indicated that consumer prices edged up 0.1 percent in May after coming in unchanged in April. Economists had been expecting a somewhat more substantial increase in prices of about 0.3 percent.

Core consumer prices, which exclude food and energy prices, also edged up 0.1 percent in May following a 0.3 percent increase in April. The modest increase in core prices came in line with economist estimates.

On the earnings front, FedEx (FDX) reported fourth-quarter adjusted earnings of $0.64 per share, beating analyst estimates of $0.51 per share. However, the firm also forecast first quarter earnings ranging from $0.30 to $0.45 per share versus estimates of $0.68 per share. The stock is down by 2.5 percent on the day as traders react to the news.

The choppy trading also comes as traders look ahead to President Barack Obama's series of reforms for the financial sector set to be revealed in further detail later today.

The administration will first establish a Financial Services Oversight Council, headed by the Treasury Department, to better coordinate the actions of various regulators. It will also facilitate coordination of policy between regulators and work to identify emerging risks to the system.

The plan will also require financial firms to be subject to higher capital standards, while it also eliminates the Federal Office of Thrift Supervision, considered one of the weaker regulators in Washington.

The major averages have moved to the downside in recent trading, pulling back into negative territory. The Dow is currently down 7.41 at 8,497.26, the Nasdaq is down 2.12 at 1,794.06 and the S&P 500 is down 2.94 at 909.03.

Sector News

Most of the major sectors are moving lower, contributing to the moderate weakness currently being shown by the major averages.

Some of the day's worst performances are being turned in by housing stocks, with the Philadelphia Housing Sector Index dropping by 3.3 percent. The day's pullback has dragged the index to its lowest intraday level in nearly ten weeks.

The weakness among housing stocks after the headline figure on mortgage applications for the most recent week dropped by 15.8 percent to 514.4 from the revised figure of 611.0 reported a week earlier. The drop reflected a steep pullback in refinancing activity, which fell 23 percent.

Notable weakness is also visible among steel and oil stocks, with the NYSE Arca Steel Index and the Philadelphia Oil Service Sector Index down by 4.5 percent and 3.8 percent, respectively.

Banking stocks have also come under pressure, as reflected by the 4.4 percent loss being shown by the Kbw Banking Index. The move has come amid concerns regarding the effect of the Obama administration's proposed reforms for the financial industry.

Meanwhile, health insurance and pharmaceutical stocks continue to move high on the day, with the Morgan Stanley Healthcare Payor Index and the NYSE Arca Pharmaceutical Index up by 2.5 percent and 1.6 percent, respectively.

Stocks Driven By Analyst Comments

Shares of Kindred Healthcare (KND) are moving higher in mid-morning trading after Wachovia raised its rating on the stock to Market Perform from Underperform. Shares of the healthcare services firm are up by 6.6 percent, moving further away from the six-month low set on Monday.

Netflix (NFLX) is also on the rise following an upgrade by Wedbush Morgan to Buy from Hold. The stock is up by 4.2 percent in mid-morning dealing, rising to its best intra-day price in nearly two weeks.

On the other hand, Packaging Corp. (PKG) is declining after being downgraded by JP Morgan Chase to Underweight from Neutral. Shares are sliding by 4.7 percent, falling to their worst intraday level in nearly two months earlier in the session.

Other Markets

In overseas trading, stock markets across the Asia Pacific region ended Wednesday's trading on a mixed note. Japan's benchmark Nikkei 225 Index closed up 0.9 percent, while Hong Kong's Hang Seng finished down 0.5 percent.

Meanwhile, the major European markets are continuing to see notable weakness, with the French CAC 40 Index and the German DAX Index both down by 1.6 percent, while the U.K.'s FTSE 100 Index is sliding by 1.1 percent.

In the bond markets, treasuries are seeing notable strength, hovering near their best levels of the day. Subsequently, the yield on the benchmark ten-year note is trading at 3.634 percent, down by 4.0 basis points on the day.

For comments and feedback: contact editorial@rttnews.com