Friday, June 25, 2010

US Market

Stocks Showing A Lack Of Direction Following Weak GDP Data
With traders digesting another downward revision to first quarter GDP growth and as financial reform legislation moves a step closer to passage, stocks are turning in a lackluster performance in morning trading on Friday. The major averages have been bouncing back and forth across the unchanged line.

markets have not shown much reaction to a report from the Commerce Department showing an unexpected downward revision to first quarter GDP, with some traders likely seeing the data as old news.

Commerce Department said that GDP increased at an annual rate of 2.7 percent in the first quarter compared to the 3.0 percent growth that was reported last month. The downward revision surprised economists, who had expected the pace of growth to be unrevised.
Paul Dales, U.S. economist at Capital Economics, said, "Overall, the U.S. economy may be performing much better than those in Europe, but this is still the weakest and longest economic recovery in U.S. post-war history."

"No wonder the equity market is struggling to move up and bond yields remain fairly close to 3%," he added.
Traders are also reacting to news that congressional negotiators have approved a final version of the financial regulatory-overhaul bill that envisages sweeping reforms. At the end of a 20-hour marathon meeting of a House-Senate conference committee, the bill passed on a party-line vote.

The proposed bill bans proprietary trading and limits hedge-fund investment while also strengthening oversight of derivatives and creating a consumer protection bureau at the Federal Reserve. The full financial regulatory bill will be put to a vote in the House and the Senate next week.

In corporate news, 
Oracle (ORCL) reported that its fourth quarter non-GAAP earnings climbed 30 percent to $0.60 per share on a 40 percent increase in revenues to $9.6 billion. The consensus estimates called for earnings of $0.54 per share on revenues of $9.50 billion.

The major averages are currently posting modest losses, although they are off their lows for the session. The 
Dow is down 21.27 points or 0.2 percent at 10,131.53, the Nasdaq is down 3.35 points or 0.2 percent at 2,214.07 and the S&P 500 is down 0.77 points or 0.1 percent at 1,072.92.
Sector News

Despite the lack of direction being shown by the broader markets, banking stocks are seeing considerable strength on the day following the news about the financial reform bill. The 
Kbw Bank Index is trading up by 1.7 percent after closing lower in each of the four previous sessions.

Within the banking sector, 
State Street (STT) is showing a notable upward move, advancing by 2.4 percent after ending the previous session at its worst closing level in over a year. After the close of trading on Thursday, the company appointed Nick Bonn to head its securities finance business.

Significant strength is also visible among 
gold stocks, which are benefiting from an increase in the price of the precious metal. With gold for August delivery up $10.80 at $1,256.70 an ounce, the NYSE Arca Gold Bugs Index is up by 2.5 percent.

While most of the other major sectors are showing only modest moves, a 6.9 percent loss by Research in Motion (RIMM) is helping to drag the wireless sector lower. 
RIM reported better than expected first quarter earnings, but its subscriber and shipments numbers were seen as a disappointment.
Airlinehousing, and semiconductor stocks have also moved to the downside in recent trading, extending the downward move seen in recent sessions.
Stocks Driven By Analyst Comments

Shares of
 LSB Industries (LXU) have come under pressure in morning trading after Canaccord Genuity downgraded its rating on the stock to Hold from Buy and cut its price target to $16 from $21. The stock is currently down by 3.9 percent after hitting a four-month intraday low.
Amerisafe (AMSF) is also posting a notable loss after Oppenheimer lowered its rating on the insurance company to Perform from Outperform. Shares of Amerisafe are down by 1.5 percent, pulling back further off the seven-month closing high set on Wednesday.

On the other hand, shares of 
Tupperware (TUP) have shown a strong upward move after JP Morgan raised its rating on the stock to Overweight from Neutral. Tupperware is currently up by 4.4 percent, although it remains stuck in a recent trading range.

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