With upbeat earnings news from tech giant Cisco (CSCO) overshadowing a largely disappointing batch of U.S. economic data, stocks are seeing modest strength in mid-day trading on Thursday. The gains on the day reflect continued upward momentum on Wall Street.
The major averages are currently posting modest gains, with the tech-heavy Nasdaq a little more firmly in positive territory. While the Nasdaq is up 12.71 points or 0.4 percent at 3,484.33, the Dow is up 17.61 points or 0.1 percent at 15,293.30 and the S&P 500 is up 1.37 points or 0.1 percent at 1,660.15.
The strength on Wall Street is partly due to a positive reaction to earnings news from Cisco, which reported better than expected fiscal third quarter results after the close of trading on Wednesday.
Adding to the buying interest, Cisco Chairman and CEO John Chambers indicated that the company is starting to see some encouraging signs in the U.S. and other parts of the world.
Shares of Cisco are currently up by 12.6 percent on the news after the networking giant reached its best intraday level in well over two years earlier in the session.
As a result of the focus on Cisco, traders have largely shrugged off several disappointing economic reports, including a report from the Labor Department showing a bigger than expected increase in initial jobless claims in the week ended May 11th.
The report said initial jobless claims rose to 360,000, an increase of 32,000 from the previous week's revised figure of 328,000.
Economists had expected jobless claims to climb to 330,000 from the 323,000 originally reported for the previous week.
The Philadelphia Federal Reserve also released a report showing an unexpected contraction in regional manufacturing activity in May.
The report showed that the index of current activity fell to a negative 5.2 in May from a positive 1.3 in April, with a negative reading indicating a contraction in regional manufacturing activity. The drop came as a surprise to economists, who had expected the index to climb to a positive reading of 2.2.
A separate report from the Commerce Department showed that housing starts tumbled 16.5 percent to a seasonally adjusted annual rate of 853,000 in April from the revised March estimate of 1.021 million.
On the other hand, the report also showed that building permits, an indicator of future housing demand, jumped 14.3 percent to an annual rate of 1.017 million in April from the revised March rate of 890,000.
Sector News
With Cisco leading the way higher, networking stocks are seeing considerable strength in mid-day trading. The NYSE Arca Networking Index has surged up by 3.1 percent, reaching a nearly three-month intraday high.
Ciena (CIEN) and Adtran (ADTN) are posting notable gains along with Cisco, advancing by 7.8 percent and 4 percent, respectively.
Significant strength has also emerged among computer hardware stocks, as reflected by the 1.8 percent gain being posted by the NYSE Arca Computer Hardware Index. The gain has lifted the index to its best intraday level in a year.
Meanwhile, biotechnology stocks have shown a notable move to the downside on the day, dragging the NYSE Arca Biotechnology Index down by 1.9 percent. The index is pulling back further off the record closing high that it set on Tuesday.
Housing stocks have also come under pressure, with the Philadelphia Housing Sector Index down by 1.7 percent following the disappointing housing starts report.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index pulled back by 0.4 percent, Hong Kong's Hang Seng Index edged up by 0.2 percent.
The major European markets all ended the day mixed, showing only modest moves. The German DAX Index inched up by 0.1 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index both dipped by 0.1 percent.
In the bond market, treasuries have moved notably higher on the heels of the disappointing economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.4 basis points at 1.879 percent.
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