(RTTNews) - After paring some of their gains earlier in the day, stocks are back on the rise in mid-afternoon trading on Friday. A drop in oil prices as well as strength in Lehman Brothers (LEH) is giving investors a reason to buy into the markets.

Shares of Lehman Brothers are soaring 12.7 percent following reports that state-run Korea Development Bank is considering an acquisition of the investment bank. Lehman has seen considerable weakness in recent weeks after several analysts cut their quarterly estimates and forecasted that the investment bank will report another huge write-down.

A sharp drop in oil prices is also helping to boost the markets. The price of oil is currently down $5.26 at $115.52 a barrel, a day after oil saw a more than $5 a barrel increase amid supply concerns. The weakness in oil comes as the U.S. dollar shows some strength versus other currencies.

In other news, telecom services provider Verizon Communications (VZ) is close to agreeing with Internet giant Google Inc. (GOOG) on a wide-ranging partnership deal, the Wall Street Journal said Friday, citing familiar sources. However, the two companies need to overcome some final hindrances.

Verizon and Google hope to conclude their discussions in the next few weeks. A positive outcome from the discussions would make Google the default search provider on Verizon devices and give the internet company a share of the ad revenue.

In recent trading, the major averages have moved back to the upside, with the Nasdaq setting a fresh intraday high. The Dow is currently up 186.86 at 11,617.07, the Nasdaq is up 34.01 at 2,414.39 and the S&P 500 is up 12.37 at 1,290.09.

Dow Components

A vast majority of the Dow components are showing considerable strength in afternoon trading, sending the blue chip index sharply higher. Of the 30 stocks that make up the Dow, only 3 are seeing any weakness.

Financial stocks are leading the Dow higher, including JP Morgan Chase (JPM). The stock is currently trading 3.2 percent higher on speculation that its rival, Lehman Brothers, may be bought by a Korean bank.

American Express (AXP), Citigroup (C) and Bank of America (BAC) are also seeing significant buying interest. American Express is up 4.1 percent, compared to a 3.5 percent gain by Citigroup. Bank of America is seeing a gain of 3.2 percent.

Boeing (BA) is also posting a substantial gain, boosted by the sharp drop in oil prices. Shares of the airplane manufacturer are climbing 3 percent, adding to gains posted in the previous two sessions.

Earlier in the day, Boeing said it is considering bailing out of the competition for a $35 billion contract to build aerial refueling tankers for the Air Force if the Pentagon does not allow it an additional four months to prepare its offer.

United Technologies (UTX) is sharply higher as well. The stock is up 2.6 percent, ending a recent selling spree. The stock had been trending lower for the past four sessions, setting a two-week closing low on Thursday.

Other stocks that are showing strength include Proctor & Gamble (PG), Microsoft (MSFT) and Caterpillar (CAT). Proctor & Gamble is up 2.6 percent compared to a 2.4 percent gain by Microsoft. Caterpillar is seeing a gain of 2.5 percent.

On the other hand, hurt by the drop in oil prices, oil producers Exxon Mobil (XOM) and Chevron (CVX) are seeing notable declines. Exxon Mobil is down by 0.6 percent, while Chevron is falling 1.1 percent. Alcoa (AA) is also seeing a slight decline.

Sector News

Benefitting from the sharp drop in oil prices, airline stocks are turning in some of the best performances in afternoon trading. The Amex Airline Index is up 8.3 percent, ending its recent downtrend. The index saw declines in each of the past four sessions, setting a nearly three-week closing low on Thursday.

The bank sector is also seeing significant buying interest, led higher by regional banks. The S&P Bank Index is up 2.4, reversing the loss posted in the previous session. Within the bank sector, KeyCorp (KEY) and Huntington Bancshares (HBAN) are two of the biggest gainers. KeyCorp is up 7.4 percent, compared to a 6.4 percent increase by Huntington.

Nonetheless, Freddie Mac (FRE) and Fannie Mae (FNM) are seeing notable weakness once again. Earlier in the day, Moody’s Investors Service downgraded its ratings on the preferred stock of the mortgage backers. Freddie Mac is down 10.1 percent, while Fannie Mae is seeing a decline of 1.7 percent.

Other stocks that are showing strength include brokerage, retail and networking stocks. The Amex Securities Broker/Dealer Index is up 3.6 percent, on the strength of Lehman Brothers. The S&P Retail Index is up 2.4 percent and the Amex Networking Index is up 2.1 percent.

On the other hand, most resource stocks are showing notable declines, hurt by the drop in commodity prices. Within the sector, gold and natural gas stocks are some of the biggest losers. The Amex Gold Bugs Index is down 3.9 percent, while the Amex Natural Gas Index is falling 2.9 percent. Oil, oil service and steel stocks are lower as well.

Other Markets

Stock market across the Asia-Pacific region closed mixed on Friday after Wall Street finished mixed overnight. The Hong Kong market remained closed on account of a typhoon warning. Meanwhile, the major European markets moved to the upside on Friday, with the U.K.’s FTSE 100 Index ending the day up 2.5 percent.

In the bond market, treasuries are showing considerable weakness in afternoon trading, sending yields higher. The yield on the benchmark ten-year note is currently up 3.6 basis points at 3.874 percent.

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Posted in Categories: Economy, Releases.

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