(RTTNews) - Stocks have shown a notable turnaround over the course of the trading day on Thursday, with the major averages pulling back firmly into negative territory after seeing early strength. The downturn comes as investors mull over a slew of economic and corporate news.

In corporate news, Dow component Hewlett-Packard Co. (HPQ) reported that its first quarter profit fell 13 percent from last year amid sharp revenue drops in its PC, printer and server businesses in a challenging economic environment.

At the same time, the company forecast second quarter earnings below analysts’ current consensus estimate and lowered its earnings outlook for fiscal year 2009.

On the economic front, the Philadelphia Federal Reserve said its index of activity in the manufacturing sector fell to a negative 41.3 in February from a negative 24.3 in January, with a negative reading indicating a contraction in the sector.

Economists had expected the index to edge down to a negative 25.0. With the bigger than expected decrease, the index fell to its lowest reading since October of 1990.

Separately, a report from the Labor Department showed that initial jobless claims for the week ended February 14th came in at 627,000, unchanged from the revised figure for the previous week and moderately higher than the 620,000 that was expected by analysts.

Furthermore, producer prices increased by much more than economists had been expecting in the month of January, according to a separate report released by the Labor Department, with the increase partly due to a modest rebound in energy prices.

In other news, the SEC announced that it is halting another Ponzi scheme, with this one aimed at members of the deaf community in the U.S. and Japan. The SEC is charging Hawaii-based Billion Coupons and its CEO with raising $4.4 million and misappropriating at least $1.4 million of the fund.

The company allegedly secured the funds from some 125 investors since beginning in September 2007. The scheme was operated by holding investment seminars at deaf community centers.

The major averages have moved off their lows the session in recent trading, although they remain firmly in negative territory. The Dow is currently down 54.96 at 7,500.57, the Nasdaq is down 13.90 at 1,454.07 and the S&P 500 is down 4.30 at 784.12.

Sector News

Banking stocks have helped to lead the markets lower over the course of the trading session, as traders continue to express concerns about the outlook for the sector. The Kbw Bank Index is currently down 4.8 percent, falling to its worst intraday level in over ten years.

Dow components Citigroup (C) and Bank of America (BAC) are helping to lead the sector and the blue chip index lower, with shares of Citigroup currently down 13.4 percent and shares of Bank of America down 11.8 percent.

Significant weakness has also emerged among computer hardware stocks, as reflected by the 4.8 percent loss currently being shown by the Amex Computer Hardware Index. The index is adding to the losses that it posted in the three previous sessions, moving further off its recent highs.

The disappointing quarterly results from Hewlett-Packard are contributing to the weakness in the sector. Shares of HP are currently down 7.8 percent after hitting their worst intraday level in three months.

Housing, semiconductor, and railroad stocks have also come under considerable selling pressure over the course of the trading day, contributing to the downturn by the broader markets.

On the other hand, oil service stocks are holding onto strong gains, benefiting from a notable increase by the price of oil. With crude for March delivery currently up $2.68 at $37.30 a barrel, the Philadelphia Oil Service Index is up 2.9 percent.

Strong gains by some telecom, health insurance, and retail stocks are also helping to limit the downside for the markets. Among telecom stocks, Sprint Nextel (S) is up 27.3 percent, climbing to its best intraday level in over three months.

The gain by Sprint Nextel comes after the communications services provider reported a narrower than expected fourth quarter loss and said it expects that its total subscriber losses will improve in 2009.

Stocks In The News

Despite the downturn by the broader markets, Whole Foods Market, Inc. (WFMI) is posting a gain of 34.3 percent following the release of its quarterly results. With the advance, the stock has climbed to its highest level in just over a month.

Whole Foods posted first quarter net income of $0.20 per share compared to $0.28 per share in the previous year quarter, while analysts expected the company to earn $0.15 per share. Sales for the quarter totaled $2.46 billion, compared to $2.45 billion in the prior year quarter.

Additionally, Priceline.com Inc. (PCLN) is up 15.4 percent following the release of its quarterly results. The company reported unadjusted net income for the fourth quarter of $0.73 per share, compared to $0.68 per share in the year-ago quarter.

Adjusted net income for the fourth quarter was $1.29 per share, while revenues rose to $406.04 million from $334.85 million in the same quarter last year. Analysts expected the company to earn $1.05 per share on revenue of $377.84 million for the fourth quarter.

At the other end of the spectrum, BioMarin Pharmaceutical Inc. (BMRN) is suffering a loss of 30.2 percent on the day as investors respond to disappointing quarterly results as well as worse than expected revenue guidance.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region ended Thursday’s trading higher after trending lower in recent sessions. Japan’s benchmark Nikkei 225 Index closed up 0.3 percent, bouncing off a nearly four-month closing low.

Meanwhile, the major European markets ended the trading day mixed. While the French CAC 40 Index closed modestly lower, the U.K.’s FTSE 100 Index and the German DAX Index finished the session up 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries are seeing continued weakness, although they have moved well off their worst levels of the day. Subsequently, the yield on the benchmark ten-year note is currently up 7.8 basis points at 2.806 percent after reaching a high of 2.879 percent.

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

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