Stocks Continue To Lack Conviction In Mid-Afternoon Trading - U.S. Commentary

Tue. June 23, 2009; Posted: 02:37 PM

(RTTNews) - Stocks are turning in an inconsistent performance in mid-afternoon trading on Tuesday amid another session marred by below average volume. The major averages have been unable to sustain any significant moves, swinging between gains and losses for most of the session.

Early gains were stymied by trader reaction to the release of a report from the National Association of Realtors, which revealed that existing home sales moved higher for the second consecutive month in May but fell short of economist expectations.

The major indices are currently turning a mixed performance, with the Dow just below the unchanged line. While the Dow is down 8.85 at 8,330.16, the Nasdaq is up 2.25 at 1,768.44 and the S&P 500 is up 2.57 at 895.61.

Dow Components

The Dow components are roughly mixed, contributing to the lack of significant movement being shown by the blue chip index on the day.

Shares of Boeing (BA | Quote | Chart | News | PowerRating) are turning in a particularly weak performance, with the stock of the plane manufacturer dropping by 7.4 percent. The plunge dragged the stock down to a one-month intraday low earlier in the day.

The weakness comes after Boeing announced that first flight of the 787 Dreamliner would be postponed yet again due to a need to reinforce an area within the side-of-body section of the aircraft.

Sector News

The major sectors continue to be split in mid-afternoon trading, extending the day's inconsistent performance.

Notable weakness has emerged among healthcare providers stocks, with the Morgan Stanley Healthcare Provider Index posting a loss of 1.6 percent. The day's retreat pulled the index down to a fresh five-week intraday low earlier.

Defense, tobacco and retail stocks are also under pressure on the day. Specifically the S&P Retail Index is down by 1.6 percent, falling to its lowest intraday level in well over two months.

On the other hand, some resource stocks are moving higher on the day, attempting to take back some of yesterday's steep losses. Gold and steel stocks are showing considerable upward moves.

Housing, banking, and commercial real estate stocks are regaining some ground after falling sharply on Monday.

In Focus: Existing Home Sales, Corporate News & Events, Obama Press Conference

A report from the National Association of Realtors showed that existing home sales rose 2.4 percent to an annual rate of 4.77 million units in May from a revised 4.66 million units in April. Economists had expected sales to rise 3 percent to 4.82 million units from the 4.68 million units originally reported for the previous month.

Despite the downward revision to April sales, the annual rate of existing home sales for the month was still up 2.4 percent compared to March. Subsequently, existing home sales showed their first back-to-back monthly gains since September 2005.

Shares of Rambus (RMBS | Quote | Chart | News | PowerRating) are also moving lower in mid-afternoon trading after the memory chip maker lowered its second quarter revenue guidance, citing the impact of the spiraling economy and its effect on the sales of semiconductors and consumer electronic systems.

In other news, Anglo American rejected Swiss mining company Xstrata's proposal for a $68 billion merger of equals on the grounds that the merger was unattractive to its shareholders.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region ended Tuesday's session showing steep losses. Japan's benchmark Nikkei 225 Index closed down 2.8 percent, while Hong Kong's Hang Seng Index fell 2.9 percent.

Meanwhile, the major European markets finished the day on opposite sides of the unchanged line. The French CAC 40 Index and the U.K.'s FTSE 100 Index slipped by 0.2 percent and 0.1 percent, respectively, while the German DAX eked out a 0.3 percent gain.

In the bond markets, treasuries remain in positive territory but have moved off of their best levels of the day in recent dealing. Subsequently, the yield on the benchmark ten-year note is trading at 3.648 percent, a drop of 4.5 basis points on the day.

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