Stocks Turn Mixed After Tepid Economic Data
Stocks have turned mixed in mid-morning trading on Friday, as the markets are digesting a mixed batch of economic data. While consumer spending and income rose more than expected and construction spending picked up unexpectedly, manufacturing activity surprised to the downside.
The major averages are currently on opposite sides of the unchanged line, with the Nasdaq posting a modest loss. The Nasdaq is currently down 4.68 points or 0.2 percent at 2,363.94, the Dow is up 10.60 points or 0.1 percent at 10,798.65 and the S&P 500 is up 0.04 or less than 0.1 percent at 1,141.24.
A report released by the Institute for Supply Management on Friday showed a notable slowdown in the pace of growth in the manufacturing sector in the month of September, although activity in the sector still expanded for the fourteenth consecutive month.
The ISM said its index of activity in the manufacturing sector fell to 54.4 in September from 56.3 in August, but a reading above 50 indicates continued growth in the sector. Economists had been expecting the index to fall to a reading of 54.8.
Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee, said, "While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging."
Meanwhile, the Commerce Department released a report showing that construction spending rose by 0.4 percent in August to an annual rate of $811.8 billion after falling 1.4 percent to an annual rate of $808.6 billion in July. The increase surprised economists, who had expected spending to decrease by 0.5 percent.
A separate report released by Thomson Reuters (TRI) and the University of Michigan showed a notable upward revision to their reading on consumer sentiment in the month of September, but the index was still down from the previous month.
The report showed that the consumer sentiment index for September was revised up to a reading of 68.2 from the previously reported reading of 66.6. The index came in above economist estimates of 67.0, although it is down from 68.9 in August.
Before the start of trading, the Commerce Department reported that personal spending increased by 0.4 percent in August, matching the increase that was seen in July. The increase in spending came in slightly above the expectations of economists, who had expected spending to rise by 0.3 percent.
The report also showed that personal income rose by 0.5 percent in August after edging up by 0.2 percent in July. Economists had been expecting income to increase by 0.3 percent.
On the corporate front, Hewlett-Packard (HPQ) announced that it has appointed Leo Apotheker as CEO and president. Apotheker is the former CEO of German tech firm SAP AG (SAP).
Meanwhile, oil giant BP Plc (BP) reported that the total cost of the oil spill in the Gulf of Mexico has ballooned to $11.2 billion. The firm also said it has put up assets for collateral in regards to its $20 billion spill liability fund.
Technology outsourcing and consulting firm Accenture (ACN) said that its fourth-quarter profit surged 75 percent from last year, mainly due to the absence of restructuring charge that impacted prior year results.
Nearly every segment of Accenture recorded positive revenue growth, which led to its quarterly earnings exceeding analysts' expectations. Further, the company's board boosted its semi-annual cash dividend by 20 percent.
Despite some of the recent downside, oil stocks remain elevated, with the NYSE Arca Oil Index posting a 1.2 percent gain. The advance has the index on pace for a five-month closing high, as the price of oil is up by $0.95 at $80.92 a barrel.
Software, airline and steel stocks also remain on the upside but have moved well off of their best levels of the day.
Meanwhile, notable weakness has emerged among railroad stocks, with the Dow Jones Railroads Index down by 1.6 percent. The decline is pulling the index down further off of last week's two-year closing high.
Health insurance and healthcare provider stocks are also trading lower but are seeing less pronounced losses.
Stocks Driven By Analyst Comments
Electric utilities firm IdaCorp (IDA) is trading higher after being upgraded at KeyBanc Capital Markets from Hold to Buy. Shares are currently up by 1.3 percent after setting a two-month intraday high earlier.
Walgreen (WAG) is also on the upside after an upgrade at Morgan Stanley from Equalweight to Overweight. The stock is posting a 0.6 percent gain, challenging the four-month closing high set earlier this week.
On the other hand, JA Solar (JASO) is seeing notable weakness after being downgraded at Auriga from Buy to Hold. The stock is down by 5.3 percent, pulling back off of a two-year closing high set on Thursday.
Overseas, stock markets in the Asia-Pacific region ended mostly higher on Friday. Japan's benchmarkNikkei 225 Index gained 0.4 percent, while India's BSE 30 Index advanced by 1.9 percent. The Chinese markets were closed on the day.
Meanwhile, the major European markets are mixed. The U.K.'s FTSE 100 Index is up by 0.6 percent, while the French CAC 40 Index and the German DAX Index are down by 0.9 percent and 0.4 percent, respectively.
In the bond markets, treasuries are little changed. The yield on the benchmark ten-year note is holding near the flat line at 2.515 percent.