(RTTNews) - Stocks continue to see modest gains in mid-afternoon trading after seeing weakness earlier in the day. Investors have shrugged off a dismal consumer confidence report and gone bargain hunting after a sharp selloff in the prior week.

Earlier weakness within the markets was seen after the Conference Board said that consumer confidence experienced a substantial deterioration in the month of June, with the group’s index of consumer confidence falling much more than expected.

The Conference Board said its consumer confidence index fell to 50.4 in June from a revised 58.1 in May. Economists had been expecting a more modest decline to a reading of about 56.0 compared to the 57.2 originally reported for the previous month.

Some positive sentiment was generated by unconfirmed rumors that Swiss investment bank UBS (UBS) may receive a bid from HSBC Holding (HBC).

In recent trading, the major averages are showing modest strength although they have moved off of their intraday highs. The Dow is currently up 25.00 at 11,867.36, the Nasdaq is up 2.50 at 2,388.24 and the S&P 500 is up 3.87 at 1,321.87.

Dow Components

After seeing earlier weakness, most of the Dow components are trading in positive territory in afternoon trading, keeping the blue chip index above the unchanged line. Of the 30 stocks that make up the Dow, 21 are showing strength while 9 are seeing declines.

American Express (AXP) is turning in one of the best performances, ending its two-day slide. Shares of the credit card issuer are currently trading up 3.3 percent, bouncing off of a three-month closing low set in the previous session. The stock had been trending lower for the past six weeks.

Other financial stocks are showing strength as well, including Bank of America (BAC), JP Morgan Chase (JPM) and Citigroup (C). Bank of America is up 3.2 percent, JP Morgan Chase is up 2.5 percent and Citigroup is up 2.1 percent.

Drug maker, Merck (MRK) is also seeing significant buying interest. The stock is climbing 3.2 percent, adding to a gain posted in the previous session. With the gain, the stock is on track to set a two and a half week closing high.

Ending its five-day selling spree, General Motors (GM) is posting a substantial gain as well. Shares of the automaker are up 3 percent, climbing off of a nearly 30 year closing low set in the previous session. The stock has been in a steep decline for the past seven weeks.

On the other hand, Caterpillar (CAT) is showing considerable weakness after the company announced that it will buy Brazil company MGE Equipamentos & Servicos Ferroviarios Ltda. for an undisclosed amount. The stock is down 3.6 and it is on track to set a three-month closing low.

DuPont (DD) is also sharply lower. The specialty chemicals maker signed a crop-protection technology agreement with Syngenta. The stock is falling 1.6 percent and it is set to close at its worst level since early March.

Sector News

Bank stocks are turning in some of the best performances, boosted by a 5.7 percent gain by Wachovia (WB). The bank said it has hired Goldman Sachs Group for advice on the company’s loan portfolio and to evaluate various alternatives. The S&P Bank Index is climbing 3.7 percent, moving off of an eleven-year closing low set in the previous session.

Housing stocks are also seeing significant buying interest. A Credit Suisse analyst initiated coverage on the housing sector with an Overweight rating, stating that the industry will likely turn a corner next spring. The Philadelphia Housing Index is climbing 2.2 percent, bouncing off of a five-year closing low set on Monday.

Within the housing sector, KB Home (KBH) and Centex Corp (CTX) are two of the biggest gainers. KB Home is climbing 9 percent, compared to a 8.7 percent gain by Centex.

Other stocks that are seeing notable gains include telecommunications, semiconductor and brokerage stocks. The Amex North American Telecommunications Index is up 2.2 percent, the Philadelphia Semiconductor Index is up 2 percent and the Amex Securities Broker/Dealer Index is up 1.6 percent.

On the other hand, chemical stocks are turning in some of the worst performances, with the S&P Chemical Index falling 2.3 percent. The index is reversing a modest gain posted in the previous session.

Some resource stocks are notably lower as well, despite modest gains in commodities. Within the resource sector, natural gas, and oil service stocks are the biggest losers. The Amex Natural Gas Index is down 1.7 percent, while the Philadelphia Oil Service Index is dropping 1.3 percent.

Other Markets

In overseas trading, the stock markets across the Asia-Pacific region closed mixed on Tuesday ahead of the U.S. Federal Reserve’s two-day meeting. Meanwhile, the major European markets ended their sessions lower. The U.K.’s FTSE 100 Index ended the day 0.6 percent lower.

Treasuries remain higher in afternoon trading, with the benchmark ten-year note trading just off of its intraday high. Subsequently, the yield on the ten-year note is currently down 6.1 basis points at 4.107 percent.

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Posted in Categories: Economy, Releases.

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