(RTTNews) - Despite the release of some weak economic data, stocks have moved into positive territory in early afternoon trading on Tuesday after seeing significant weakness earlier in the session. The turnaround in the markets comes amid buying interest within the financial sector.

The strength in the financial sector came after Wachovia (WB) said it has hired Goldman Sachs Group for advice on the company’s loan portfolio and to evaluate various alternatives. Last week, rumors circulated that the bank hired Goldman to aid it in searching for a new Chief Executive.

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.

In recent trading, the major averages have moved into positive territory, with the Dow climbing above the unchanged line after testing its January low in mid-morning trading. The Dow is currently up 47.47 at 11,889.83, the Nasdaq is up 2.78 at 2,388.52 and the S&P 500 is up 6.56 is up 1,324.56.

Sector News

Bank stocks are turning in some of the best performances after showing earlier weakness. The S&P Bank Index is climbing 4.5 percent, moving off of an eleven-year closing low. The index has seen significant selling pressure for the past six weeks.

Within the bank sector, Synovus Financial (SNV) and Regions Financial (RF) are seeing some of the biggest gains. Shares of Synovus are up 6.4 percent, compared to a 2.4 percent gain by Regions Financial.

Housing stocks are also seeing considerable buying interest, despite some negative news on home prices. 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 seeing an increase of 3.3 percent, bouncing off of a five-year closing low set in the previous session.

Centurytel (CTL) is leading the telecommunications sector higher after the company raised its dividend tenfold and accelerated its repurchase plan. Centurytel is up 18.9 percent, contributing to a 2.4 percent gain by the Amex North American Telecommunications Index.

Other stocks that are seeing notable gains include brokerage, airline and semiconductor stocks. The Amex Securities Broker/Dealer Index is up 2.5 percent, the Amex Airline Index is up 1.1 percent and the Philadelphia Semiconductor Index is up 1.5 percent.

On the other hand, chemical stocks are turning in some of the worst performances, with the S&P Chemical Index falling 1.8 percent. The index is reversing a modest gain posted in the previous session and set a two-week intraday low earlier in the day.

Within the chemical sector, Hercules (HPC) is one of the biggest losers. Earlier in the day, the chemical maker announced that it has acquired Brazilian chemical company Logos Quimica for an undisclosed sum. Shares of Hercules are currently down 1.8 percent after setting a three-month intraday low.

Some resource stocks are also showing notable weakness, despite a modest increase in commodities prices. Within the resource sector, natural gas, oil and oil service stocks are some of the biggest losers. The Amex Natural Gas Index is down 1.5 percent, the Amex Oil Index is down 0.5 percent and the Philadelphia Oil Service Index is down 1.1 percent.

Stocks In The News

While the broader markets are showing some strength, United Parcel Service (UPS) is seeing significant selling pressure after the company cut its earnings outlook for the second quarter. The world’s largest shipping carrier said it now expects second quarter earnings to be in the range of $0.83 to $0.88 per share, compared to its prior guidance of $0.97 to $1.04 per share.

Shares of United Parcel Service are currently trading 4.2 percent lower on the news, extending a nearly three-week selling trend. Earlier in the session, the stock set a four-year intraday low.

Cooper Tire & Rubber Co. (CTB) is also posting a substantial loss. The company said it is cutting second quarter tire production at its North American facilities due to lower demand and expected shortages on some raw materials. The stock has been trending lower for nearly three months and it set a yearly intraday low. The stock is currently down 2.3 percent.

On the other hand, Eastman Kodak (EK) is showing considerable strength after the company announced that it will buy back up to $1 billion worth of its shares, which will be paid for in part by a $581 million tax refund from the IRS. The stock is surging 14.8 percent, climbing up from a multi-year closing low set on Monday.

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. Japan’s Nikkei 225 index fell 0.1 percent to finish at 13,849.56.

Meanwhile, the major European markets ended their sessions lower. The French CAC 40 Index and the German DAX Index closed down 0.8 percent and 0.8 percent, respectively, while the U.K.’s FTSE 100 Index ended the day 0.6 percent lower.

Treasuries have pared their gains in afternoon trading, although the benchmark ten-year note remains above the unchanged line. Subsequently, the yield on the ten-year note is currently down 3.3 basis points at 4.135 percent.

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Posted in Categories: Economy, Releases.

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