Plus   Neg

Stocks Hovering Near Best Levels In Mid-Day Trading - U.S. Commentary

Stocks have moved sharply higher over the course of the trading day on Tuesday, benefiting from a positive reaction to the latest news out of Europe as well as some upbeat earnings news. The markets have largely shrugged off some disappointing U.S. economic data.

The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is up 169.76 points or 1.3 percent at 13,091.17, the Nasdaq is up 47.53 points or 1.6 percent at 3,035.93 and the S&P 500 is up 18.02 points or 1.3 percent at 1,387.59.

The rally on Wall Street, which comes after stocks ended the previous session mixed, is partly due to news of a successful Spanish debt auction.

Spain sold 3.2 billion euros worth of twelve and eighteen-month bills, above the target of 3 billion euros. While the yields were well above those sold last month, the auctions attracted improved demand.

The results of the bond auctions contributed to a drop in Spanish bond yields and offset some of the recently renewed concerns about the European debt crisis.

Upbeat earnings news has also generated some positive sentiment, with shares of Coca-Cola (KO) up by 2.7 percent after the beverage giant reported better than expected first quarter earnings.

Coca-Cola reported first quarter earnings that rose to $0.89 per share from $0.82 per share in the same quarter a year ago, coming in above analyst estimates for $0.87 per share. The company benefited from a 5 percent increase in the volume of drinks sold.

Goldman Sachs (GS) also reported better than expected first quarter earnings and announced an increase in its quarterly dividend to $0.46 per share.

While Johnson & Johnson (JNJ) also reported stronger than expected earnings growth, the healthcare giant reported a modest drop in sales.

Meanwhile, trades have largely shrugged off some disappointing U.S. economic data, including a report showing an unexpected drop in housing starts in the month of March.

The report showed that housing starts fell 5.8 percent to an annual rate of 654,000 in March from the revised February estimate of 694,000. Economists had expected starts to rise to an annual rate of 700,000.

At the same time, the Commerce Department said building permits rose 4.5 percent to an annual rate of 747,000 in March from the revised February rate of 715,000. With the increase, building permits rose to their highest level since September of 2008.

A separate report from the Federal Reserve showed that industrial production unexpectedly came in unchanged for the second consecutive month in March.

Sector News

Most of the major sectors have shown strong moves to the upside on the day, reflecting broad based buying interest in the markets.

Healthcare provider stocks are posting particularly strong gains, resulting in a 3.1 percent jump by the Morgan Stanley Healthcare Provider Index. Sunrise Senior Living (SRZ) is leading the sector higher on news that it will receive $28 million for the sale of its interest in sixteen communities to Ventas (VTR).

Considerable strength is also visible among networking stocks, as reflected by the 2.5 percent gain being posted by the NYSE Arca Networking Index. Ciena (CIEN) and Acme Packet (APKT) are turning in two of the networking sector's best performances.

Oil service stocks have also moved sharply on the day, driving the Philadelphia Oil Service Index up by 2 percent. The strength in the sector comes amid a notable increase by the price of crude oil, with crude for May delivery climbing $1.63 to $104.56 a barrel.

Steel, biotechnology, chemical, and gold stocks are also posting notable gains in mid-day trading, benefiting from the broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific moved modestly lower on Tuesday, extending the drop seen in the previous session. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index slipped 0.2 percent.

Meanwhile, the major European markets moved sharply higher over the course of the trading day. While the U.K.'s FTSE 100 Index surged up by 1.8 percent, the German DAX Index and the French CAC 40 Index both jumped by 2.7 percent.

In the bond market, treasuries have moved to the downside following the successful Spanish bond auctions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.1 basis points at 2.005 percent.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

Follow RTT