(RTTNews) - Stocks continue to turn in a lackluster performance during early afternoon trading on Friday, as mixed news combined with low volume ahead of the long weekend has made it difficult for the markets to find a solid direction.

Shortly after the opening bell, Reuters and the University of Michigan said their consumer sentiment index fell to a reading of 56.2 in February from a reading of 61.2 in January. Economists had been expecting a more modest decrease by the index to a reading of about 60.2.

Brian Bethune, Chief U.S. Financial Economist at IHS Global Insight, said, “These record low readings for consumer sentiment suggest that American households are likely to remain hunkered down in the face of intensifying recessionary forces.”

On the corporate front, PepsiCo (PEP) reported quarterly results on Thursday that included an adjusted earnings figure that rose year-over-year and came in line with expectations. The company also said that it expects moderate earnings and revenue growth for full-year 2009.

Meanwhile, lawmakers continue to inch towards passage of President Obama’s economic stimulus plan. Both the House and the Senate are expected to vote on the bill in the next day or two, possibly putting it on Obama’s desk by his deadline of President’s Day.

Speaking to the Business Council at the White House, President Obama pledged that the “goal at the heart of this plan is to create jobs,” 90 percent of which would be in the private sector, he said.

The creation of jobs cannot come too soon as mass layoff events showed a substantial increase in the fourth quarter of 2008, according to a report released by the Labor Department, with both layoff events and separations reaching their highest levels on record.

The report showed that employers initiated 3,140 mass layoff events in the fourth quarter, nearly double the 1,582 mass layoff events in the third quarter and up more than 70 percent from the 1,814 mass layoff events in the fourth quarter of the previous year.

The layoffs resulted in 508,859 separations in the fourth quarter compared to 290,052 in the previous quarter and 301,592 in the same quarter a year ago.

While the major averages are currently all in negative territory, the tech-heavy Nasdaq is posting only a modest loss. The Nasdaq is down 1.83 at 1,539.88, while the Dow is down 63.40 at 7,869.36 and the S&P 500 is down 5.54 at 829.65.

Sector News

With the uncertainty being shown by the broader markets, the major sectors are showing considerable moves on both sides of the unchanged line.

On the upside, defense stocks are turning in some of the best performances of the day, with the Philadelphia Defense Index up 2.2 percent, while the telecom sector is also yielding notable strength. The Amex North American Telecommunications Index is up 1.3 percent on the day.

Within the telecom sector, one of the biggest gains is being shown by Sprint Nextel (S), which has risen 9.6 percent to reach its highest intraday level in over two months.

Semiconductor and healthcare stocks are also posting strong gains, with the Philadelphia Semiconductor Index and the Morgan Stanley Healthcare Provider Index up 2.1 percent and 1.4 percent, respectively.

At the other end of the spectrum, banking stocks continue to post some of the widest losses of the day. The weakness in the banking sector have driven the Dow Jones Banks Index down 4.4 percent on the day.

British bank Lloyds Banking Group Plc (LYG) is showing one of the worst losses in the banking sector, falling 28.7 percent on the day following news that it expects its subsidiary HBOS to post a hefty loss for the full year 2008.

Lloyds expects HBOS to report an underlying loss of about �8.5 billion, before tax, for the year ended December 31, 2008.

Real estate, tobacco, and gold stocks are also posting notable losses in early afternoon trading. The losses by gold stocks come a pullback by the price of the precious metal.

Stocks In The News

Abercrombie & Fitch Co. (ANF) is on the rise during Friday’s trading following the release of its fourth quarter results. The stock is currently up 10.2 percent on the day. With the advance, the stock has climbed to its highest level in over a month.

While the apparel retailer reported fourth quarter earnings that fell to $0.78 per share from $2.40 per share in the yea-ago quarter, the company’s adjusted earnings came in at $1.10 per share compared to analyst estimates of $1.00 per share.

Additionally, McAfee, Inc. (MFE) is posting a gain of 5.8 percent after the company reported GAAP net income for the fourth quarter of $0.29 per share, compared to $0.07 per share for the year-ago quarter. Excluding items, non-GAAP net income for the fourth quarter was $0.53 per share, compared to $0.46 per share in the prior year quarter.

Revenue for the quarter rose to $424.0 million from $356.5 million in the same quarter last year. Analysts expected the company to earn $0.53 per share on revenue of $420.58 million for the fourth quarter.

Meanwhile, Wyndham Worldwide Corp. (WYN) is suffering a loss of 23.2 percent after the company reported a net loss for the fourth quarter of $7.63 per share, compared to net income of $0.58 per share in the same period last year.

Adjusted net income for the quarter was $0.47 per share, versus $0.46 per share in the year-ago quarter. Revenues for the quarter were $911 million, down from $1.03 billion in the same period in 2007.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Friday, bouncing back to the upside after seeing notable weakness in the previous session. Japan’s benchmark Nikkei 225 Index closed up 1 percent.

Meanwhile, the major European markets closed mixed after showing some uncertainty near the end of the trading day. The French CAC 40 Index rose 1.1 percent and the German DAX Index edged 0.1 percent, while the U.K.’s FTSE 100 Index ended the session with a loss of 0.3 percent.

In the bond market, treasuries have come off their lows of the day but are still suffering considerable weakness. Subsequently, the yield on the benchmark ten-year note is currently up 12.4 basis points at 2.851 percent.

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