RTTNews - After a considerable pullback in the previous session, stocks are showing a lack of conviction in mid-morning trading on Friday. With no significant economic news on tap for the day, a mix of profit taking and bargain hunting has contributed to the uncertainty in the major averages.
Some traders looked to better-than-expected earnings from Sears Holdings (SHLD), Gap (GPS) and Campbell's Soup (CPB), prompting some of the earlier gains in equities.
On the corporate front, investors considered the increasing likelihood of bankruptcy by auto icon General Motors (GM).
The major averages are all in positive territory after pulling into the red earlier in the session. The Dow is currently up by 51.70 to 8343.83, the Nasdaq is up 6.11 to 1701.36, and the S&P 500 is up by 4.86 to 893.19.
Sectors are largely mixed in mid-morning trading, contributing to the uncertainty seen by the major averages on the day.
Notable weakness has emerged in airline stocks, as reflected a fall of 1.8 percent in the Amex Airline Index. With the fall, the index continues to give back gains, falling to its lowest level since late April.
Healthcare stocks are also posting one of the worst performances of the day, with the Morgan Stanley Healthcare Payor Index down by 0.9 percent on the session.
The day's losses are being mitigated by resource stocks, with gold leading the way. Subsequently, the Amex Gold BUGS Sector Index is up by 2.6 percent on the day, extending recent gains. The move has come as gold futures continue to post notable gains on the NYMEX.
Steel, oil and railroad stocks are also helping to buoy the major averages.
Stocks Driven By Analyst Comments
Shares of Archer Daniels Midland Co. (ADM) are up by 8.3 percent following an upgrade by Citigroup, climbing to their highest levels since early April. The stock was upgraded from a rating of sell to hold, prompting some of the upward move seen on the day. Citigroup raised its rating based on improving profit margins for the agricultural processor.
On the other hand, Salesforce.com (CRM) is sliding after a downgrade by Citigroup from a Buy to a Hold rating. The rating change came as Salesforce.com issued lower revenue guidance. The stock has dipped following the downgrade, falling by 8.5 percent on the day.
In Focus: Earnings, Corporate News
GMAC Financial Services LLC, the financial arm of automaker General Motors Corp. (GM), said Thursday that it received a $7.5 billion capital infusion from the U.S. Treasury Department.
General Motors may be sent into bankruptcy protection by the U.S. government as early as the end of next week, according to the Washington Post.
Under the tentative bankruptcy plan, GM reportedly could receive just short of $30 billion in additional federal loans, pushing the government's investment in the automaker to nearly $45 billion. The report stated that the planned capital injection was just a starting point in discussions and could change.
The move comes as the Obama administration is preparing to lift Chrysler LLC out of bankruptcy next week.
American International Group (AIG) said its Chairman and CEO Edward Liddy, who led the uphill task of reinstating confidence in the minds of investors, intends to step down once the board finds a successor. Liddy was also instrumental in persuading the Board to accept and segregate the roles of Chairman and CEO, and will have a separate Chairman and CEO now.
Diversified healthcare giant Johnson & Johnson (JNJ) announced Thursday that it agreed to acquire a development stage biopharmaceutical company, Cougar Biotechnology Inc. (CGRB), for about $1.0 billion in a cash tender offer. Following the news, Cougar's shares are up 16.0 percent in mid-morning trading.
On the earnings front, Sears Holdings (SHLD) announced a surprising first-quarter profit Friday morning, even as revenues dived $1 billion. The firm reported adjusted of $0.38 cents a share, beating the consensus estimate for a loss of $0.88 cents a share.
Shares are extending their gains following the report, climbing by 16.1 percent in mid-morning trading.
Retailer Gap Inc. (GPS) reported first-quarter earnings after the closing bell on Thursday. The firm announced net income of $215 million or $0.31 per share, compared to $249 million or $0.34 per share in the same quarter last year. Wall Street analysts expected the company to earn $0.30 per share for the quarter. Traders reacted positively to the news, as the stock is up by 2.1 percent in mid-morning trading.
Campbell Soup (CPB), the world's largest soup maker, said Thursday after the markets closed that its third quarter profit dropped 67 percent from last year when results were boosted by a hefty gain from the sale of the Godiva Chocolatier business. However, the company's quarterly earnings per share, excluding special items, came in above analysts' expectations. The company also raised its fiscal year 2009 adjusted earnings outlook.
Shares of Campbell Soup are up by 1.0 percent in mid-morning trading as investors continue to react to the report.
In other news, the Office of Thrift Supervision announced Thursday the closing of Florida-based BankUnited FSB, and named the FDIC as receiver. Investors led by John Kanas invested $900 million to acquire the new BankUnited, making it one of Florida's best capitalized banks.
In overseas trading, stock markets across the Asia-Pacific region finished lower on Friday. Japan's benchmark Nikkei 225 Index slipped by 0.4 percent and Hong Kong's Hang Seng Index fell 0.8 percent.
Meanwhile, the major European markets are largely uncertain. The French CAC 40 Index is up by 0.2 percent and the German DAX Index is down by 0.1 percent. The U.K.'s FTSE 100 Index is mildly higher, rising by 0.3 percent.
In the bond markets, treasuries are showing moderate weakness, but are well off of their morning lows. Subsequently, the yield on the benchmark ten-year note is up to 3.387 percent, a climb of 3.4 basis points on the day.
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