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Stocks Seeing Modest Strength In Mid-Day Trading - U.S. Commentary

4/26/2012 12:10 PM ET

With upbeat housing data overshadowing a disappointing jobs report, stocks have moved modestly higher during trading on Thursday. Buying interest has remained relatively subdued, however, limiting the upside for the markets.

The major averages have given back some ground in the past few minutes but remain in positive territory. The Dow is up 55.66 points or 0.4 percent at 13,146.38, the Nasdaq is up 5.12 points or 0.2 percent at 3,034.75 and the S&P 500 is up 1.98 points or 0.1 percent at 1,392.67.

The modest strength that has emerged on Wall Street is partly due to the release of a report from the National Association of Realtors showing a much bigger than expected increase in pending home sales in the month of March.

Calling the data another signal that the housing market is recovering, NAR said its pending home sales index rose by 4.1 percent in March following a revised 0.4 percent increase in February. Economists had expected a much more modest 1.0 percent increase.

A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The upbeat data helped to offset the negative sentiment generated by a report from the Labor Department showing a much smaller than expected drop in initial jobless claims in the week ended April 21st.

The report showed that jobless claims edged down to 388,000 from the previous week's revised figure of 389,000. Economists had been expecting jobless claims to fall to 375,000 from the 386,000 originally reported for the previous week.

Traders are also digesting the latest batch of earnings news, with share of Xilinx (XLNX) up by 6.9 percent after the programmable computer chip maker reported better than expected fourth quarter results and provided upbeat first quarter revenue guidance.

Tyco International (TYC) is also trading higher after reporting second quarter results that exceeded analyst estimates. The company also said its plan to split itself into three separate companies remains on track for completion at the end of September

On the other hand, shares of Exxon Mobil (XOM) are down by 1.7 percent after the oil giant reported first quarter earnings that fell by more than analysts had anticipated. Meanwhile, the company also announced a 21 percent increase in its second quarter dividend.

UPS (UPS) is also in the red after the delivery giant reported first quarter earnings that rose year-over-year but came in below analyst estimates.

Sector News

While buying interest has remained somewhat subdued, natural gas stocks have shown a strong move to the upside on the day. Reflecting the strength in the natural gas sector, the NYSE Arca Natural Gas Index has advanced by 1.6 percent.

The strength among natural gas stocks comes amid an increase by the price of natural gas, with natural gas for June delivery up $0.027 at $2.197 per million BTUs.

Housing stocks are also seeing considerable strength, as reflected by the 1.5 percent gain being posted by the Philadelphia Housing Sector Index. Ryland Group (RYL), M/I Homes (MHO), and PulteGroup (PHM) are posting strong gains after reporting their quarterly results.

Significant strength is also visible among semiconductor stocks, with the Philadelphia Semiconductor Index up by 1.5 percent. Brokerage, oil, and biotech stocks are also posting notable gains.

On the other hand, trucking stocks have come under substantial selling pressure on the day, dragging the Dow Jones Trucking Index down by 3.5 percent. Some health insurance and networking stocks are also posting steep losses.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed modestly higher on Thursday. Japan's Nikkei 225 Index closed just above the unchanged line, while Australia's All Ordinaries Index crept up by 0.3 percent. Hong Kong's Hang Seng Index advanced by a more notable 0.8 percent.

Meanwhile, the major European markets turned mixed over the course of the trading day. While the French CAC 40 Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index both ended the day up by 0.5 percent.

In the bond market, treasuries are regaining some ground after closing lower in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.5 basis points at 1.949 percent.

by RTT Staff Writer

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