News Column

Stocks Holding On To Notable Gains In Mid-Day Trading - US Commentary

July 14, 2014

WASHINGTON (Alliance News) - After showing a strong move to the upside in early trading on Monday, stocks have continued to perform well throughout the session. With the gains on the day, the Dow has offset last week's pullback to reach a new record intraday high.

The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 132.53 points or 0.8% at 17,076.34, the Nasdaq is up 31.36 points or 0.7% at 4,446.85 and the S&P 500 is up 11.18 points or 0.6% at 1,978.75.

The strength on Wall Street partly reflects a positive reaction to earnings news from Citigroup (C), with the financial giant jumping by 3.6%.

Before the start of trading, Citigroup reported second quarter net income that fell sharply year-over-year due largely to a USD3.8 billion charge in connection with a settlement with the Justice Department related to the bank's sale of shoddy mortgage-backed securities.

However, the company also reported adjusted earnings of USD1.24 per share on revenues of USD19.3 billion compared to analyst estimates for earnings of USD1.05 a share on revenues of USD18.9 billion.

The markets have also benefited from news on the merger-and-acquisition front, with URS Corp. (URS) moving sharply higher after agreeing to be acquired by Aecom (ACM) for approximately USD4 billion in cash and stock.

Whiting Petroleum (WLL) and Kodiak Oil & Gas (KOG) are both also posting notable gains after Whiting reached an agreement to acquire Kodiak in an all-stock transaction valued at USD6 billion.

On the other hand, shares of AbbVie (ABBV) have moved to the downside after Shire (SHPG) said it would recommend the biopharmaceutical company's revised takeover proposal to its shareholders.

While stocks have moved mostly higher on the day, trading activity has remained somewhat subdued as traders look ahead to a slew of earnings news and economic data later in the week.

Goldman Sachs (GS), JP Morgan (JPM), Intel (INTC), Bank of America (BAC), IBM (IBM), Morgan Stanley (MS), and General Electric (GE) are among the big-name companies due to report their quarterly results in the coming days.

Traders are also likely to keep a close eye on reports on retail sales, producer price inflation, industrial production, housing starts, and regional manufacturing activity.

Congressional testimony by Federal Reserve Chair Janet Yellen may also attract attention, although Peter Boockvar, managing director at the Lindsey Group, noted, "We can probably write her speech for her based on everything we've heard over the past few months."

Sector News

Despite the notable upward move shown by the broader markets, most of the major sectors are showing only modest moves in mid-day trading.

Internet stocks have shown a strong move to the upside, however, with the Dow Jones Internet Index advancing by 1.2%. NetFlix (NFLX) and Digital River (DRIV) are turning in two of the sector's best performances.

Considerable strength also remains visible among brokerage stocks, as reflected by the 1.1% gain being posted by the NYSE Arca Broker/Dealer Index. The index is climbing further off the one-month closing low it set last Thursday.

Oil service, transportation, and banking stocks are also seeing some strength on the day, moving higher along with most of the other major sectors.

Meanwhile, gold stocks are seeing significant weakness, dragging the NYSE Arca Gold Bugs Index down by 2.6%. The weakness in the sector comes as gold for August delivery has tumbled USD29.50 to USD1,307.90 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan'sNikkei 225 Index advanced by 0.9%, while Hong Kong'sHang Seng Index rose by 0.5%.

The major European markets also moved to the upside on the day. While the German DAX Index jumped by 1.2%, the UK'sFTSE 100 Index and the French CAC 40 Index both climbed by 0.8%.

In the bond market, treasuries are seeing modest weakness after showing a strong upward move last week. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 2.541%.

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Source: Alliance News

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