Mid-Day Update: Financial Stocks Leading Market Rebound Despite Moody's Downgrade


Stocks are moderately higher today, with the primary market gauges recouping about a quarter of their respective losses in yesterday's broad-based selloff. The best gains are among financial stocks after expected downgrades by Moody's Investors Service of the credit ratings of 15 large banks and brokerages were not as severe as some market participants were expecting. Most other industry sectors in the S&P 500 are higher, although energy and mining stocks are in the red as commodity prices continue to labor somewhat under diminished demand expectations.

Moody's late yesterday cut its credit ratings for more than a dozen money-center banks and brokerages, citing declining profitability as the global economy slows and increased regulatory and investor scrutiny. None of the cuts were for more than two notches, however, allaying investor fears of even deeper cuts. Among the sector heavyweights posting the best gains are JPMorgan Chase & Co. ( JPM ) and Morgan Stanley ( MS ), gaining about 2% and 1%, respectively.

Also supporting financial issues today was the European Central Bank announcement of plans to widen its bank collateral requirements, accepting lower quality assets and paring rating thresholds in a bid to help facilitate more lending.

But industrial stocks are lower after Ryder System Inc ( R ) - which is down more than 10% and around $1 above year lows - slashed its profit outlook for the rest of the year. Citing diminished results in its fleet management business, the company cut per-share earnings estimates for the current quarter ending this month by $0.17 a share from prior forecasts. The full-year median guidance was cut by $0.32 a share. R also said unusually high healthcare insurance costs was contributing to the expected Q2 shortfall.

There were no domestic economic reports today.

Commodities are mixed. Crude oil for August delivery was up $1.06 at $79.26 a barrel in late-morning trade following a 4% freefall during yesterday session. July natural gas was up 7 cents at $2.651 per 1 million BTU. August gold was down $1.70 at $1,563.80 an ounce while July silver was down 16 cents at $26.68 an ounce. July copper was flat at $3.30.

Among energy ETFs, the US Oil Fund and the US Natural Gas Fund are both up more than 1%. Among precious-metal funds, the Market Vectors Gold Miners ETF is down 0.7%, the SPDR Gold Shares ETF is off 0.1% and the iShares Silver Trust is down 0.6%.

Here's where the markets stand at mid-day:

NYSE Composite Index up 28.31 (+0.37%) to 7,594.4126

Dow Jones Industrial Average up 59.45 (+0.47%) to 12,633.02

S&P 500 up 4.99 (+0.38%) to 1,330.50

Nasdaq Composite Index up 17.11 (+0.60%) to 2,876.20


Nikkei 225 Index down 0.29%

Hang Seng Index down 1.40%

Shanghai China Composite Index down 1.40%

FTSE 100 Index down 1.00%


NYSE Energy Sector Index down 0.11% to 11,255.65

NYSE Financial Sector Index up 0.66% to 4,358.39

NYSE Healthcare Sector Index up 0.62% to 7,321.54


(+) HNR, (+87% from near year lows) Sells 32% stake in Venezuelan oil assets for $725 million

(+) DB, (+0.8%) Recovering following Moody's credit-rating downgrade

(+) NPSP, (+10.5%) Eurozone regulators recommend bowel drug for approval


(-) AEC, (-3.8% to near year lows) Prices 5.5 million shares at $14.40 each, raising about $75.8 million

(-) DRI, (-1.7%) Restaurant chain's Q4 earnings lag estimates; weak forecast

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: JPM , MS , R

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