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Stocks Posting Modest Gains In Mid-Day Trading - U.S. Commentary

While buying interest has remained somewhat subdued, stocks have moved modestly higher over the course of the trading day on Friday. The markets have benefited from some upbeat earnings news and a better than expected reading on consumer sentiment.

The major averages are currently posting modest gains, with the Nasdaq just off its high for the session. While the Nasdaq is up 13.13 points or 0.4 percent at 3,063.74, the Dow is up 27.85 points or 0.2 percent at 13,232.47 and the S&P 500 is up 1.87 points or 0.1 percent at 1,401.85.

The modest strength on Wall Street is partly due to upbeat earnings news from big-name companies like Amazon.com (AMZN), with the online retailer up by 14.7 percent after reporting its first quarter results.

After the close of trading on Thursday, Amazon reported first quarter earnings that fell year-over-year but still came in substantially higher than analysts had expected.

Drug giant Merck (MRK) and auto giant Ford (F) also reported better than expected first quarter earnings but are currently trading lower on the day.

Positive sentiment has also been generated by a report from Reuters and the University of Michigan showing an unexpected improvement in U.S. consumer sentiment in the month of April.

The report showed that the consumer sentiment index for April came in at 76.4 compared to the mid-month reading of 75.7. Economists had been expecting a much more modest upward revision to a reading of 75.8.

With the much bigger than expected upward revision, the index came in above March's final reading of 76.2 and is at its highest level since February of 2011.

The upbeat data helped to offset negative sentiment generated by a separate report from the Commerce Department showing somewhat weaker than expected economic growth in the first quarter.

The Commerce Department said that GDP increased by 2.2 percent in the first quarter compared to the 3.0 percent growth seen in the fourth quarter. Economists had been expecting first quarter GDP to increase by about 2.5 percent.

While GDP rose by less than expected in the first quarter, it still marked the eleventh consecutive quarter of economic growth. Additionally, traders often view the GDP data as old news.

Sector News

Most of the major sectors are showing only modest moves, although considerable strength has emerged among housing stocks. The Philadelphia Housing Sector Index has risen by 1.9 percent to its best intraday level in a month.

Standard Pacific (SPF), Ryland Group (RYL), and PulteGroup (PHM) are turning in some of the housing sector's best performances, extending the strong upward moves seen in the past few sessions.

Gold stocks also continue to see some strength on the day, driving the NYSE Arca Gold Bugs Index up by 1 percent. Agnico-Eagle (AEM) is leading the sector higher after reporting better than expected first quarter results.

On the other hand, health insurance stocks have come under pressure, with the Morgan Stanley Healthcare Payor Index down by 2.7 percent after hitting a two-month intraday low. Coventry Health Care (CVH) is posting a steep loss after reporting first quarter earnings that missed estimates.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index ended the day down by 0.3 percent.

Meanwhile, the major European markets moved to the upside on the day. The U.K.'s FTSE 100 Index rose by 0.5 percent, the German DAX Index advanced by 0.9 percent and the French CAC 40 Index jumped by 1.1 percent.

In the bond market, treasuries are seeing modest strength on the weaker than expected GDP data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1 basis point at 1.949 percent.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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