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Stocks Turning In Lackluster Performance Following Mixed Data - U.S. Commentary

Stocks are lacking direction in mid-morning trading on Friday, as the markets are digesting a widely mixed batch of economic reports. The major averages are lingering near the unchanged line, bouncing between gains and losses.

Kicking off today's deluge of economic data was news from the Commerce Department revealing that U.S. gross domestic product increased at an annual rate of 5.9 percent in the fourth quarter compared to the advance estimate of 5.7 percent growth. Economists had expected the pace of GDP growth to be unrevised.

Further, the Institute for Supply Management - Chicago said its business barometer index rose to 62.6 in February from 61.5 in January, with a reading above 50 indicating growth in the manufacturing sector. The increase came as a surprise to economists, who had expected the index to slip to 59.7.

On the other hand, Reuters and the University of Michigan reported that their consumer sentiment index was downwardly revised to a reading of 73.6 from the previous estimate of 73.7. Economists had been expecting the index to be revised up to a reading of 73.9. The index came in at 74.4 in January.

Additionally, the National Association of Realtors revealed that sales of previously owned homes fell 7.2 percent in January compared to the previous month. The figure came in at a seasonally adjusted annual rate of 5.05 million units - its lowest level in seven months.

While the month-to-month figure showed a decline, sales did rise from the same period in 2009. Compared to last year, January's figure represented an 11.5 percent improvement.

In earnings news, American International Group Inc. (AIG) reported a loss of $65.51 per share for the fourth-quarter and a loss of $53.23 per share on an adjusted basis. The stock has come under pressure as the firm indicated that it may need additional government assistance as its debt liabilities mature.

After the markets closed for trading in the previous session, software solutions provider Novell Inc. (NOVL) reported a higher profit in its first quarter, helped by lower operating expenses. Earnings for the quarter were in line with estimates, but revenues fell short. Looking ahead to the second quarter, Novell expects revenues to be flat sequentially.

The major averages have moved to the upside in recent trading, climbing modestly above the unchanged line. The Dow is currently up 25.92 points or 0.3 percent at 10,346.95, the Nasdaq is up 5.66 points or 0.3 percent at 2,239.88 and the S&P 500 is up 3.25 points or 0.3 percent at 1,106.18.

Sector News

Most the major sectors are showing only modest moves, contributing to the lackluster market performance.

Health insurance stocks are some of the day's best performers, pushing the Morgan Stanley Healthcare Payor Index up by 1.5 percent. Despite the gain, the index remains rangebound following a series of lackluster outings.

Cigna (CI) is helping to lead the sector higher, posting a 2.4 percent gain. The advance has lifted the stock to a three-week intraday high.

Airline, healthcare provider and gold stocks are also seeing buying interest, while steel, railroad, tobacco and electronic storage stocks are moving lower, limiting the upside for the major averages.

Stocks Driven By Analyst Comments

Dynegy (DYN) is moving lower in mid-morning trading after being downgraded at Citigroup from Buy to Hold. The stock has dropped by 4.6 percent, setting an eleven-month intraday low.

Turkcell (TKC) is also under pressure following a downgrade at UBS from Neutral to Sell. Shares are currently down by 2.2 percent, slipping to a seven-month intraday low.

On the other hand, Hersha Hospitality Trust (HT) is moving higher after being upgraded at Oppenheimer from Perform to Outperform. The stock has gained 2.8 percent, jumping to its best intraday price in nearly sixteen months.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw a moderate rebound on Friday. Japan's benchmark Nikkei 225 Index rose by 0.2 percent, while Hong Kong's Hang Seng Index advanced by 1 percent.

The major European markets are also moving higher. The U.K.'s FTSE 100 Index and the French CAC 40 Index are up by 0.9 percent and 0.6 percent, respectively, while the German DAX Index is up by 0.5 percent.

In the bond markets, treasuries are modestly higher following the day's influx of economic data. Subsequently, the yield on the benchmark ten-year note is trading at 3.619 percent, seeing a loss of 2.3 basis points.

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