Stocks Moving Mostly Lower In Mid-Afternoon Trading - U.S. Commentary

(RTTNews) - Stocks are mostly lower in mid-afternoon trading on Friday, unable to sustain their early gains despite strong reports on fourth quarter GDP, consumer sentiment and activity in the Chicago manufacturing sector. The major averages have all turned negative, although the Dow is posting only a slim loss.

Opening bell gains came after the Commerce Department reported that U.S. gross domestic product expanded for the second consecutive quarter in the final three months of 2009, with the growth marking the biggest increase since the third quarter of 2003.

The headline number exceeded economist estimates by a hefty margin as growth was boosted by a notably slower rate of decline in inventories.

Also on the economic front, Reuters and the University of Michigan revealed that their final reading on consumer sentiment in the month of January increased by much more than economists had been expecting.

The early advance was also helped by data from the Institute for Supply Management - Chicago, which showed that activity in the Chicago-area manufacturing sector unexpectedly expanded at a faster pace in the month of January. The strong results came as sector employment jumped to its highest level in nearly five years.

On the earnings front, conglomerate Honeywell International Inc. (HON) and toy maker Mattel Inc. (MAT) recorded fourth quarter net income results that beat estimates but posted revenues that missed expectations.

The major averages have moved to the downside in the past few minutes, with the Nasdaq and the S&P 500 hitting new lows for the session. The Dow is currently down 5.60 at 10,114.86, the Nasdaq is down 22.58 at 2,156.42 and the S&P 500 is down 4.67 at 1,079.86.

Dow Components

The Dow components are turning in a roughly mixed performance in mid-afternoon, contributing to the nearly flat performance by the blue chip index.

Microsoft (MSFT) is turning in one of the Dow's worst performances, with the software giant currently down 3.5 percent. The loss by Microsoft comes even though the company's second quarter earnings came in ahead of analysts' estimates.

Boeing (BA), Intel (INTC) and Alcoa (AA) are also under pressure, while chemical giant DuPont (DD) is posting a 2.6 percent gain. With the move, the stock is bouncing off of Thursday's five-week closing low.

Wal-Mart (WMT) is also advancing, rising by 2 percent. Shares of the discount retailer are moving off yesterday's two and a half month closing low.

Home Depot (HD), Disney (DIS) and American Express (AXP) are also on the rise, helping to limit the downside for the Dow.

Sector News

Computer hardware stocks are seeing some of the day's weakest outings, dragging the NYSE Arca Computer Hardware Index down by 3.9 percent. Western Digital Corp. (WDC) is weighing significantly on the sector, falling by 4.1 percent. With the pullback, the stock is poised to close at its worst price in two months.

Electronic storage and semiconductor stocks are also moving notably lower, further rounding out the weakness in the tech sector.

Gold, telecommunications, brokerage, and natural gas stocks are also moving to the downside, while some banking stocks are moving higher, resulting in a 1.5 percent gain by the S&P Banks Index. The advance has the index on pace for its best closing level in over a year.

Biotechnology stocks are also seeing substantial gains, lifting the NYSE Arca Biotechnology Index by 1 percent, although it remains in a range.

In Focus: Economic Data, Earnings News

As mentioned above, the Commerce Department said that gross domestic product rose at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter. Economists had been expecting GDP to increase by about 4.7 percent for the period.

Separately, Reuters and the University of Michigan reported that the consumer sentiment index for January was revised up to 74.4 compared to the preliminary estimate of 72.8. The headline number was also higher that December's final reading of 72.5 and beat expectations for a revision to 73.0.

Further, the Institute for Supply Management - Chicago said that its index of regional manufacturing activity jumped to 61.5 in January from 58.7 in December, with a reading above 50 indicting growth in the sector.

The increase surprised economists, who had expected the index to slip to a reading of 57.2. The data was helped by sector employment jumping to its highest level in nearly five years.

In earnings news, conglomerate Honeywell International Inc. reported fourth-quarter net income of $0.91 per share, topping the $0.90 per share forecast by analysts. Sales came in at $8.07 billion, down from $8.71 billion in 2008 and short of the $8.15 billion projected for the quarter.

Mattel Inc. recorded fourth quarter net income of $0.89 per share, trouncing expectations that called for $0.68 per share. Net sales rose to $1.96 billion from $1.94 billion in the prior year quarter but were unable to exceed the $1.98 billion estimated by Street analysts.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region fell by notable margins on Friday. Japan's benchmark Nikkei 225 slipped by 2.1 percent and Hong Kong's Hang Seng Index lost 1.2 percent.

Meanwhile, the major European markets closed on the upside. The U.K.'s FTSE 100 gained 0.9 percent, while the German DAX Index and the French CAC 40 Index rose by 1.2 percent and 1.4 percent, respectively.

In the bond markets, treasuries have turned higher after seeing earlier weakness. Subsequently, the yield on the benchmark ten-year note is trading at 3.631 percent, posting a loss of 2.7 basis points.

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