Stocks Wobbly In Mid-Morning Trading After Tepid Data
Stocks are looking for direction in mid-morning trading on Friday, as the markets are digesting a mixed batch of economic reports, including an in-line but only lukewarm reading on third quarter GDP. Traders are also parsing over data showing a slight dip in consumer sentiment and a pickup in Chicago-area business activity.
The major averages have all seen choppy movement in recent dealing and are currently mixed. While theNasdaq is up 4.54 points or 0.2 percent at 2,511.91, the Dow is down 3.33 points or less than 0.1 percent at 11,110.62 and the S&P 500 is down 0.18 points or less than 0.1 percent at 1,183.60.
On the economic front, Reuters and the University of Michigan reported that their consumer sentiment index for October was downwardly revised to a reading of 67.7 from the previous estimate of 67.9 and is down from 68.2 in September. Economists had expected the index to be upwardly revised to a reading of 68.0.
Separately, the Institute for Supply Management - Chicago said its Chicago business barometer rose to 60.6 in October from 60.4 in September, with a reading above 50 indicating growth. The increase came as a surprise to economists, who had expected the barometer to slip to a reading of 58.0.
Before the start of trading, the Commerce Department said that gross domestic product increased at an annual rate of 2.0 percent in the third quarter following the 1.7 percent growth that was seen in the second quarter. The increase in GDP matched the expectations of economists.
Commenting on the data, James Knightley, an economist at ING Financial Markets, said, "In general, with concerns about the economic outlook persisting and inflation pressures fading further this won't alter the outcome of the FOMC meeting on Wednesday."
"The Fed seems to be hinting at an incremental programme, perhaps lasting 6 months, but which could be extended depending on the newsflow," he added. "Consequently, while the market may be disappointed by a "small" announced figure for QE, the actual end result could end up being far higher."
Among recently released quarterly earnings reports, Chevron Corp. (CVX) posted third-quarter earnings of $1.87 per share, well short of estimates for earnings of $2.15 per share, while sales came in slightly above expectations at $49.72 billion.
Merck & Co. Inc. (MRK) reported adjusted third-quarter net income of $0.85 per share, topping expectations for $0.82 per share. Sales for the quarter came in at $11.12 billion, short of estimates for $11.23 billion. The firm's full-year 2010 earnings and revenue projections were tightened closer to analyst expectations.
Additionally, Microsoft Corp. (MSFT) said that its first quarter profit rose 51 percent from last year, driven by solid enterprise growth and continued strong consumer demand for its Windows 7 operating system and Office 2010 software. The company's quarterly earnings came in above analyst expectations as did its quarterly revenue.
Telecommunications and gold stocks are seeing some of the strongest gains despite a largely tepid market performance thus far.
Qualcomm (QCOM) is one of the strongest percentage gainers in the telecom sector, rising by 2.3 percent and on pace for its best close in nine months.
Meanwhile, the 1.1 percent advance by the NYSE Arca Gold Bugs Index comes as the price of gold futures is up by $1.60 or 0.1 percent at 1,344.10 an ounce.
Software, wireless and housing stocks are also trading higher, although most sectors are seeing only modest moves.
On the downside, some selling is visible among oil and brokerage stocks.
Stocks Driven By Analyst Comments
Cardinal Health (CAH) is on the upside after being upgraded by Robert W. Baird from Neutral to Outperform. The stock is up by 1.1 percent and on pace for a three-month closing high.
On the other hand, property reinsurer PartnerRe Ltd. (PRE) is trading lower after being downgraded by Stifel Nicolaus from Buy to Hold. Shares are currently down by 1.6 percent, sinking to a one-month intraday low in earlier trading.
MDU Resources (MDU) is also under pressure following a downgrade by Robert W. Baird from Outperform to Neutral. The stock is posting a 1.9 percent loss, falling to a one-month intraday low.
Overseas, stock markets in the Asia-Pacific region ended mostly lower on Friday. Japan's benchmark Nikkei 225 Index slid by 1.8 percent and Hong Kong's Hang Seng Index fell by 0.5 percent, while India's BSE 30 Index bucked the downtrend, rising by 0.5 percent.
Meanwhile, the major European markets have turned higher after seeing earlier weakness. The U.K.'s FTSE 100 Index and the German DAX Index are up by 0.1 percent and 0.2 percent, respectively, while the French CAC 40 Index is up by 0.5 percent.
In the bond markets, treasuries are showing modest strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.625 percent, posting a loss of 3.6 basis points.