Stocks Regain Ground But Remain In The Red - U.S. Commentary

(RTTNews) - After coming under pressure earlier in the session, stocks have regained some ground but remain negative in mid-day trading on Friday. With the losses on the day, the major averages are pulling back further off their recent multi-month highs.

The major averages currently remain in the red, with the tech-heavy Nasdaq posting a steep loss. While the Nasdaq is down 58.24 points or 1.2 percent at 4,887.64, the Dow is down 20.24 points or 0.1 percent at 17,962.28 and the S&P 500 is down 5.53 points or 0.3 percent at 2,085.95.

The early weakness on Wall Street came following the release of disappointing quarterly results from companies such as software giant Microsoft (MSFT).

After the close of trading on Thursday, Microsoft reported adjusted third quarter earnings of $0.62 per share compared to analyst estimates for $0.64 per share. The company also said revenues fell year-over-year and came in below analyst estimates.

Google parent Alphabet (GOOGL) has also come under pressure on the day after reporting weaker than expected first quarter results.

Outside of the tech sector, industrial firms such as General Electric (GE), Honeywell (HON), and Caterpillar (CAT) have also moved to the downside after reporting their quarterly results.

Negative sentiment may also have been generated by a report from Markit showing that its reading on U.S. manufacturing activity unexpectedly fell to a six-year low in April.

Markit said the flash estimate of its manufacturing purchasing managers index came in at 50.8 in April compared to 51.5 in March.

A reading above 50 continues to indicate growth in the manufacturing sector, but economists had expected the index to rise to 52.0.

However, the selling pressure seen earlier in the day was partly offset by a notable increase by the price of crude oil. Crude for June delivery is currently climbing $0.92 to $44.10 a barrel.

Sector News

With Microsoft leading the way lower, software stocks continue to see considerable weakness in mid-day trading. The Dow Jones Software Index is down by 3.6 percent after hitting its lowest levels in well over a month.

Along with Microsoft, Adobe Systems (ADBE) and Check Point Software (CHKP) are also posting notable losses on the day.

Significant weakness also remains visible among airline stocks, as reflected by the 1.9 percent drop by the NYSE Arca Airline Index. The index is pulling back further off the nine-month closing high it set on Tuesday.

Hawaiian Airlines parent Hawaiian Holdings (HA) is posting a steep loss after reporting better than expected first quarter earnings but on weaker than expected revenues.

Gold and internet stocks are also seeing notable weakness, although selling pressure has waned from earlier in the trading day.

On the other hand, railroad stocks have moved sharply higher, driving the Dow Jones Railroads Index up by 3.7 percent. The index is extending a recent rally to reach a five-month intraday high.

Norfolk Southern (NSC) has helped to lead the railroad sector higher, jumping by 9.5 percent after reporting first quarter earnings that exceeded estimates.

Energy stocks are also seeing substantial strength in mid-day trading, benefiting from the increase by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index jumped by 1.2 percent, while Hong Kong's Hang Seng Index fell by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.1 percent, the German DAX Index fell by 0.6 percent and the French CAC 40 Index dipped by 0.3 percent.

In the bond market, treasuries have climbed back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.875 percent.