RTTNews - After being plagued by choppy trading for much of the session, stocks showed some life in afternoon trading on Tuesday, finishing largely on the upside. The Nasdaq and S&P 500 saw some strength on the day, while the Dow drifted lower just before the closing bell.
The U.S. Department of Treasury announced that 10 of the largest U.S. financial institutions borrowing money from the Treasury are planning on paying back their loans. Organizations such as JP Morgan Chase (JPM), U.S. Bancorp (USB) and Bank of New York Mellon (BK) will repay a total of $68 billion.
President Barack Obama praised the move, noting that the government has turned a profit from the first round of repayments. He also offered cautious optimism that the financial system is stabilizing,
While Obama said that the announcement that banks are relying less on Treasury assistance is welcome news, he said it does not excuse the actions of the banks.
The president also announced his intention to instate the pay as you go program, restricting the amount of money lawmakers can spend to only what they can save in other areas.
Speaking to U.S. lawmakers, Treasury Secretary Timothy Geithner said that he plans to begin the reform of the U.S. regulatory system soon.
In the next few weeks we will outline a comprehensive plan of reform that will include systemic risk regulations to ensure that no large and interconnected firm or market can take on so much risk that its failure could destabilize the entire financial system, Geithner told a subcommittee of the Senate Appropriations committee.
On the economic front, wholesale inventories fell by a little more than expected in the month of April, according to a report released by the Commerce Department on Tuesday, with the report also showing a modest decrease in wholesale sales.
The report showed that wholesale inventories fell 1.4 percent in April following a revised 1.8 percent decrease in March. Economists had expected inventories to decrease by about 1.1 percent compared to the 1.6 percent drop originally reported for the previous month.
Additionally, the Commerce Department said that wholesale sales edged down 0.4 percent in April after falling by a more significant 2.4 percent in March. Wholesale sales were down 19.5 percent compared to the same month a year ago.
In corporate news, bankrupt automaker Chrysler's planned asset sale to a group led by Italian automaker Fiat was thrown into uncertainty after a U.S. Supreme Court Justice issued a stay on the sale. The stay was sought by a group of Indiana pension funds.
General Motors Corp. (GMGMQ.PK) also announced that Edward Whitacre Jr., former chairman and Chief Executive Officer of AT&T (T) would become chairman of the new GM when the company is re-launched later this summer. Kent Kresa will continue to serve as interim chairman until the launch.
Meanwhile, the Wall Street Journal reported that consumer goods giant Procter & Gamble (PG) is expected to name its Chief Operating Officer Robert McDonald as the new Chief Executive Officer, effective July 1, 2009.
Stocks finished the day mostly higher, led by gains in the technology sector. The tech-heavy Nasdaq closed up by 17.73 points or 1 percent at 1,860.13 and the S&P 500 rose 3.29 points or 0.4 percent to 942.43, while the Dow slipped by 1.43 points or less than a tenth of a percent to 8,763.06.
Most of the major sectors finished on the upside, contributing to the largely upward move shown by the broader markets.
Some of the day's best performances came from trucking stocks, with the Dow Jones Trucking Index finishing up by 2.4 percent on the day. With the gain, the index finished the session at its best closing level in over eight months.
Forward Air (FWRD) and Celadon (CLDN) posted notable gains, benefiting from upgrades by KeyBanc Capital Markets.
Significant strength was also visible in the semiconductor sector, as reflected by the 4.5 percent gain posted by the Philadelphia Semiconductor Index. The strength in the sector came as traders react to upbeat guidance from Texas Instruments (TXN) and Microchip Technology (MCHP)
Steel, chemical and oil service stocks also saw considerable upside on the session. Oil service stocks were boosted by an increase the price of oil, which resumed its upward move Tuesday, climbing by $1.92 and inching above the $70 a barrel mark.
On the other hand, health insurance stocks pulled back, with the Morgan Stanley Healthcare Payor Index slipping by 1.7 percent for the day. With the pullback, the index closed at its worst level in just over a month.
The Dow components finished the day roughly mixed, contributing to the flat performance by the blue chip index.
American Express (AXP) posted a strong gain, closing up 5 percent, at its best level in just over a month. The firm was boosted by news that it was among the companies approved by the Treasury to begin to pay back TARP funds issued by the government late last year.
Strength was also visible in shares of Alcoa (AA) and Intel (INTC), which climbed by 3.5 percent and 3.1 percent, respectively. Aluminum producer Alcoa finished the day at its best level in just over five months, while Intel was able to take back most of its recent losses.
Meanwhile, shares of United Technologies (UTX) and Hewlett Packard (HPQ) came under pressure, dropping by 1.7 and 1.5 percent, respectively, backing off of the multi-month highs set in the previous session.
Kraft Foods (KFT), Procter & Gamble (PG) and Pfizer (PFE) also slipped on the day, contributing to the modest loss posted by the blue chip index.
In overseas trading, stock markets across the Asia-Pacific region finished Tuesday's session moderately lower. Japan's benchmark Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng closed down by 1.1 percent.
Meanwhile, the major European markets closed mixed for the session. The U.K.'s FTSE 100 Index drifted lower by less than a tenth of a percent and the German DAX Index fell by 0.1 percent, whereas the French CAC 40 Index finished up by 0.2 percent.
In the bond markets, treasuries were able to close in positive territory. Subsequently, the yield on the benchmark ten-year note closed at 3.86 percent, a drop of 3.1 basis points on the session.
Ahead of the opening bell on Wall Street on Wednesday, traders are likely to focus on trade balance data for April from the Commerce Department. The deficit is expected to expand to a negative $29.0 billion from the previous report of a negative $27.6 billion. The report is set for release at 8:30 a.m. ET.
Later in the day, trading is likely to be impacted by the Treasury Department's budget for May and the Federal Reserve's Beige Book, which compiles commentary on recent economic activity in the 12 Fed districts.
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