RTTNews - After stalling at the opening bell, stocks are showing a lack of direction in mid-morning trading on Friday as reaction to a slew of earnings and some positive data from the housing sector has been largely muted. The major averages are currently just below the unchanged line but only by mild margins.
Traders took in the day's earnings with limited optimism as a number of firms were able to beat estimates based on cost cutting measures rather than revenue growth.
Notably, tech giants Google (GOOG) and IBM Corp. (IBM) firmly beat Wall Street estimates, while financial stalwarts Bank of America (BAC) and Citigroup (C) also bested forecasts, but by more modest margins. Conglomerate General Electric (GE) and toymaker Mattel (MAT) also surpassed expectations.
On the economic front, the U.S. Commerce Department revealed that housing starts rose 3.6 percent to an annual rate of 582,000 units in June from a revised pace of 562,000 units in the previous month.
Economists were expecting the figure to remain relatively stable with the pace of 532,000 units that was originally reported for May.
The report also showed that building permits, an indicator of future housing demand, climbed 8.7 percent to an annual pace of 563,000 from the revised May rate of 518,000.
The major indices have seen some choppy movement in recent dealing, remaining near the unchanged mark. The Dow is down by 12.78 points to 8,699.04, the Nasdaq is down by 5.18 points to 1,879.85 and the S&P 500 is down by 2.65 points to 938.09.
Notable losses are visible in commercial real estate stocks, with a 2.4 percent loss being posted by the Morgan Stanley Real Estate Index in mid-morning trading. With the decline, the index has snapped four straight days of gains, moving off of its best closing level in two weeks, reached in the previous session.
Healthcare provider stocks are also tumbling, with the Morgan Stanley Healthcare Provider Index falling by 1.7 percent. The retreat has forced the index to surrender all of yesterday's gains, while dragging the index away from its best closing level in just over one month. Healthcare-related stocks continue to see volatility as rhetoric is heating up among lawmakers regarding healthcare reform.
While defense and utility stocks are also seeing weakness, strength is visible among housing and tobacco stocks. The Philadelphia Housing Sector Index and the NYSE Arca Tobacco Index are up by 1.4 percent and 1.8 percent, respectively. The housing sector is being helped by the day's surprising report on housing starts.
Stocks Driven By Analyst Comments
Shares of Nokia (NOK) are sliding after being downgraded by UBS to Neutral from Buy. The stock is down by 2.8 percent, backing off of a one month closing high set on Wednesday, while falling to its worst intra-day price in over three months.
Taleo (TLEO) is also moving lower following a downgrade at FBR Capital from Market Perform to Underperform. The broker also lowered its target price on the stock to $14 from $17. Shares are falling by 9.6 percent, extending their losses for the second straight session after reaching a nine month closing high on Wednesday.
In overseas trading, stock markets across the Asia-Pacific region closed higher on Friday, with Hong Kong's Hang Seng Index climbing by 2.4 percent while Japan's benchmark Nikkei 225 Index posted a much more modest gain of 0.6 percent.
The major European markets are on the upside, with the German DAX Index and the French CAC 40 Index advancing by 0.6 percent and 0.9 percent, respectively. The U.K.'s FTSE 100 Index is also on the rise, moving up by 0.8 percent.
In the bond markets, treasuries are continuing to see considerable weakness following the day's report from the housing sector. Subsequently, the benchmark ten-year note is trading at 3.651 percent, posting a gain of 9.4 basis points.
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