Stocks are turning in a relatively lackluster performance in morning trading on Tuesday, although the major averages are seeing some weakness after ending the previous session sharply higher. The choppy trading comes as traders digest comments from Federal Reserve Chairman Ben Bernanke.
Testifying before the Joint Economic Committee, Bernanke noted that the U.S. economy has contracted sharply since last autumn, although he said that recent data suggests that the pace of contraction may be slowing.
However, while the Fed chairman said that recent data shows some signs that the beleaguered housing market may be bottoming, he noted that the available indicators of business investment remain extremely weak.
Looking forward, Bernanke said economic activity is expected to bottom out then turn up later this year. Nonetheless, he noted that the rate of growth of real economic activity is likely to remain below its longer-run potential for a while.
In the question and answer portion of his testimony, the Fed Chairman is likely to be grilled about the results of the government's stress tests of the nation's largest financial institutions, but he is unlikely to provide much new information ahead of the release of the results on Thursday.
Separately, a report recently released by the Institute for Supply Management showed the seventh month of contraction in service sector activity in the month of April, although the pace of contraction slowed even more than economists had expected.
The ISM said its index of activity in the service sector rose to 43.7 in April from 40.8 in March, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a more modest increase to a reading of 42.2.
Meanwhile, shares of Dow component Kraft Foods (KFT) are seeing considerable strength after the company reported first quarter earnings that rose more than analysts had expected despite a bigger than expected decrease in revenues. Kraft is currently up 5.9 percent.
Kraft reported first quarter earnings that rose to $0.45 per share from $0.39 per share in the year-ago quarter even as its revenues for the quarter fell 6.5 percent to $9.4 billion. Analysts had expected the company to earn $0.40 per share on revenues of $9.67 billion.
The major averages have shown a notable move to the downside in recent trading, falling to new lows for the session. The Dow is currently down 19.75 at 8,406.99, the Nasdaq is down 18.02 at 1,745.54 and the S&P 500 is down 5.57 at 901.67.
While many of the major sectors are showing relatively modest moves, significant weakness has emerged in the natural gas sector. The Amex Natural Gas Index is currently down 4 percent, pulling back well of the nearly six-month closing high that it set on Monday.
Chesapeake Energy (CHK) is helping to lead the sector lower, with the oil and gas company currently down 9.5 percent. The loss by Chesapeake comes after the company reported a steep first quarter loss due to writedowns of the value of its gas and oil properties.
Real estate stocks are also seeing considerable weakness, dragging the Morgan Stanley REIT Index down 3.3 percent. With the loss, the index is pulling back off the three-month closing high that it set in the previous session.
Significant weakness is also visible among banking, trucking, and oil service stocks. The weakness among oil service stocks comes as the price of oil falls $0.59 to $53.88 a barrel.
On the other hand, healthcare provider stocks are seeing considerable strength in morning trading, pushing the Morgan Stanley Healthcare Provide Index up 4 percent. Kindred Healthcare (KND) is leading the sector higher after reporting better than expected first quarter earnings.
Airline, health insurance, and gold stocks are also turning in strong performances, with the strength among gold stocks coming as the price of gold rises $9.10 to $911.30 an ounce.
Stocks Driven By Analyst Comments
After posting strong gains in the two previous sessions, shares Anadarko Petroleum (APC) are under pressure in morning trading, with the oil and gas company currently down 7.1 percent after ending Monday's trading at a seven-month closing high.
The loss by Anadarko Petroleum comes after Barclays downgraded its rating on the company's stock to Equal-Weight from Overweight. Barclays also lowered its price target for the stock to $44 per share from $46 per share.
Shares of Advance Auto Parts (AAP) are also under pressure after JP Morgan downgraded its rating on the auto parts retailer to Neutral from Overweight. Advance Auto Parts is currently down 2 percent, although it remains stuck in a recent trading range.
On the other hand, shares of Las Vegas Sands (LVS) are currently up 11.9 percent after Merrill/Bank of America upgraded its rating on the casino operator to Neutral from Underperform. Las Vegas Sands is also due to release its quarterly results after the close.
In overseas trading, stocks in the Asia-Pacific region saw some further upside on Tuesday following the substantial rally that was seen in the previous session, although the Japanese market remained closed for another national holiday.
Among the major markets in Europe, stocks in London are posting strong gains after the market was closed on Monday, driving the U.K.'s FTSE 100 Index up 2.7 percent. The French CAC 40 Index is down 0.2 percent, while the German DAX Index is up 0.1 percent.
In the bond market, treasuries are once again showing a lack of direction, bouncing back and forth across the unchanged line. The yield on the benchmark ten-year note is currently down less than a basis point at 3.155 percent.
For comments and feedback: contact firstname.lastname@example.org