(RTTNews) - Stocks are seeing notable strength in early afternoon trading on Tuesday, with the major averages climbing back more firmly into positive territory after pulling back well off their highs earlier in the session following the release of some mixed economic data.

Reports on service sector activity, factory orders, and pending home sales painted a mixed picture of the economy when they were released earlier today.

The Institute for Supply Management released its report on activity in the services sector in the month of December, with the index of activity in the sector unexpectedly rising to 40.6 from a record low reading of 37.3 in November. However, a reading below 50 still indicates a contraction in the sector.

Meanwhile, the government issued its report on November factory orders, showing a decline of 4.6 percent following a revised 6.0 percent decrease in October. Factory orders were expected to show a more modest 2.6 percent decline in November.

Weakness was also seen in pending home sales, as a report released by the National Association of Realtors illustrated showed that pending home sales fell by 4 percent in November to a record low. Analysts expected pending sales to show a significantly narrower 1.0 percent decline.

Lawrence Yun, NAR chief economist, said, “Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November.”

In related news, a report released by RadarLogic Inc. showed that the housing crisis took a severe toll on 25 of the largest U.S. cities from January to October 2008, as the recession, rising unemployment, and plunging home values forced many homeowners to default on their mortgages.

By the end of October 2008, only one of the 25 cities, Milwaukee, saw home prices increase from October 2007. In addition, over half of the cities saw their largest year over year declines since RadarLogic began tracking data in January 2000.

Meanwhile, President-elect Barack Obama is working feverishly in the remaining weeks before his inauguration to get a head start on his economic stimulus plan, aiming for bipartisan support in the face of a severe recession.

The president-elect met with both Democrat and Republican lawmakers Monday to discuss his proposed package, aiming at a swift passage following his inauguration on January 20th.

“We may have disagreements, but I think it’s going to be possible for us to work out those disagreements in the atmosphere of civility and comity,” Obama said at the meeting. “The American people, I think, are counting on us to act swiftly, boldly, but responsibly, in dealing with these issues.”

The major averages are currently all well above the unchanged line, with the Nasdaq outperforming the Dow and the S&P 500. The Dow is currently up 40.78 at 8,993.67, the Nasdaq is up 19.10 at 1,647.13 and the S&P 500 is up 5.54 at 932.99.

Sector News

While the price of oil has pulled back well off its high for the session, oil service stocks remain some of the best performers of the day. Within the oil service sector, Weatherford (WFT) is posting a gain of 10.4 percent after the company sold $1.25 billion of 10-year and 30-year notes, according to IFR.

With the notable advance by Weatherford, along with strong gains by other oil service stocks, the Philadelphia Oil Service Index is up 5.6 percent, adding to recent gains to reach its best intraday level in just under two months.

Steel stocks are also continuing to show notable strength, contributing to a 5.2 percent gain by the Amex Steel Index. Brokerage stocks are also posting notable gains, with standout gains by Morgan Stanley (MS) and Jefferies Group (JEF) driving the Amex Securities Broker/Dealer Index up 3.1 percent.

Significant strength has also emerged in a variety of other sectors, although many of the major sector indices have pulled back well off their best levels of the day. Some computer hardware and semiconductor stocks are posting notable gains, resulting in the standout gain by the tech-heavy Nasdaq.

At the other end of the spectrum, tobacco and utility stocks are turning in some of the worst performances of the day. The Amex Tobacco Index is down 2.4 percent, while steep losses by Duke Energy (DUK) and PG&E Corp (PCG) have dragged the Philadelphia Utility Index down 1.2 percent.

Stocks In The News

Indevus Pharmaceuticals, Inc. (IDEV) is up 71 percent during Tuesday’s trading following news that Endo Pharmaceuticals Holdings Inc. (ENDP) has offered to buy the specialty pharmaceutical company. With the gain, Indevus has risen to its best intraday level in ten months.

The buyout is valued at about $370 million, or $4.50 per Indevus share, with up to an additional $267 million, or $3.00 per Indevus share, payable in the future upon the achievement of certain regulatory and sales milestones.

Amedisys, Inc. (AMED) is also posting a notable gain after the company provided revenue and earnings per share guidance for 2009.

The company anticipates net service revenue in 2009 to be in the range of $1.425 - $1.475 billion and expects earnings per share in the range of $4.10 - $4.30. Analysts expect earnings of $3.82 per share on revenues of $1.41 billion. Subsequently, Amedisys stock is up 15.2 percent on the day.

Meanwhile, Logitech (LOGI) is showing a loss of 9 percent after announcing that it has withdrawn its fiscal year 2009 growth targets for sales and operating income due to the deepening global recession.

Additionally, Logitech said it expects the economic environment to worsen in the coming months and announced a 15 percent reduction in its salaried workforce.

Other Markets

In overseas trading, the major markets in the Asia-Pacific region ended mostly higher on Tuesday, with the Japanese Nikkei 225 index closing up 0.4 percent.

The major European markets also ended the session with notable gains. The French CAC 40 Index and the German DAX Index closed up 1.1 percent and 0.9 percent, respectively, while the U.K.’s FTSE 100 Index posted a gain of 1.3 percent by the end of the trading day.

In the bond market, treasuries have moved well off their lows of the day but continue to see considerable weakness. Subsequently, the yield on the benchmark ten-year note is up 4.5 basis points at 2.533 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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