Stocks are seeing modest weakness in early trading on Friday

October 28, 2011 10:38 AM2 commentsViews: 21

Stocks are seeing modest weakness in early trading on Friday

Stocks are seeing modest weakness in early trading on Friday, giving back some ground after moving sharply higher in the previous session. The major averages have dipped below the unchanged after ending Thursday’s trading at nearly three-month closing highs.

Currently, the major averages are currently posting modest losses, just off their lows for the young session. The Dow is down 24.59 points or 0.2 percent at 12,183.96, the Nasdaq is down 13.09 points or 0.5 percent at 2,725.54 and the S&P 500 is down 7.22 points or 0.6 percent at 1,277.37.

While profit taking is contributing to the early weakness on Wall Street, selling pressure has remained relatively subdued. As a result, stocks are holding on to the bulk of their recent gains.

Banking stocks have shown a notable move to the downside, dragging the KBW Bank Index down by 1.6 percent. The loss by the index comes after it ended the previous session at its best closing level since early August.

Housing, brokerage, and steel stocks are also seeing early weakness after helping to lead the markets higher on Thursday.

On the other hand, electronic storage stocks are moving to the upside, with Quantum (QTM) posting a standout gain after reporting better than expected second quarter results.

In economic news, the Commerce Department released a report showing a notable increase in consumer spending in September despite a smaller than expected increase in income.

The report showed that personal income edged up by 0.1 percent in September following a 0.1 percent drop in August. Economists had been expecting income to increase by 0.3 percent.

At the same time, the Commerce Department said spending rose by 0.6 percent in September after climbing by 0.2 percent in the previous month. The increase in spending matched economist estimates.

On the earnings front, drug giant Merck (MRK) reported third quarter adjusted earnings that exceeded analyst estimates on stronger than expected sales growth. The company also raised the low end of its full year adjusted earnings guidance.

Chevron (CVX) also released its third quarter results before the start of trading, with the oil giant reporting earnings of $3.92 per share compared to analyst estimates for $3.44 per share. The company said revenues rose to $61.26 billion, below expectations.

In other news, Hewlett-Packard (HPQ) is up by 3.1 percent after the company announced that it has decided that its personal computer unit will remain part of the company.

Overseas, stock markets across the Asia-Pacific region moved to the upside on Friday, benefiting from the overnight rally on Wall Street. Japan’s Nikkei 225 Index advanced by 1.4 percent, while Hong Kong’s Hang Seng Index rose by 1.7 percent.

Meanwhile, the major European markets have turned mixed on the day after rising sharply in the previous session. While the German DAX Index is up by 0.2 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are down by 0.1 percent and 0.6 percent, respectively.

In the bond market, treasuries are regaining some ground after falling sharply on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.3 basis points at 2.342 percent.

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