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Stocks Holding On To Gains Ahead Of Fed Announcement - U.S. Commentary

4/25/2012 12:00 PM ET

Stocks continue to perform well in mid-day trading on Wednesday, although buying interest has waned from earlier in the session. Following the rally seen in early trading, the markets appear to be holding their breath ahead of the monetary policy announcement from the Federal Reserve.

Currently, the major averages are posting notable gains but are well off their highs for the session. The Dow is up 69.59 points or 0.5 percent at 13,071.15, the Nasdaq is up 55.90 points or 1.9 percent at 3,017.50 and the S&P 500 is up 13.83 points or 1 percent at 1,385.80.

The strong upward move seen in early trading was largely due to a positive reaction to better than expected quarterly results from tech giant Apple (AAPL). Apple, the world's largest publicly-traded company by market capitalization, has risen by 9 percent on the news.

After the close of trading on Tuesday, Apple reported second quarter earnings of $12.30 per share, higher than $6.40 per share last year, while revenues jumped 59 percent to $39.2 billion. Analysts had expected the company to earn $10.06 per share on revenues of $36.8 billion.

The company benefited from a notable increase in the number of iPhones sold during the quarter, which soared 88 percent year-over-year to 35.1 million.

However, traders seem to have moved to the sidelines since then, waiting on the Federal Reserve's monetary policy announcement and Chairman Ben Bernanke's subsequent press conference.

The Fed is widely expected to leave interest rates at near-zero levels, but traders will pay close attention to any comments regarding the outlook for further quantitative easing.

Meanwhile, the markets have largely shrugged off the release of a report from the Commerce Department showing a sharp drop in durable goods orders in the month of March.

The report showed that durable goods orders tumbled by 4.2 percent in March following a revised 1.9 percent increase in February. Economists had expected a more modest drop of about 1.5 percent.

Sector News

Healthcare provider stocks continue to see considerable strength in mid-day trading, with the Morgan Stanley Healthcare Provider Index up by 2.7 percent. At its high for the session, the index was at its best intraday level in almost a month.

Kindred Healthcare (KND) has helped to lead the healthcare provider sector higher, surging up by 21.9 percent on news that the Centers for Medicare & Medicaid Services proposed spreading out a reduction in reimbursement-payment rates for nursing home operators over three years.

Significant strength is also visible among chemical stocks, as reflected by the 2.2 percent gain being posted by the Dow Jones Chemicals Index. FMC Corp. (FMC) is turning in one of the sector's best performances after declaring a 2-for-1 stock split and a quarterly dividend of $0.09 per share.

Computer hardware, railroad, steel, and biotechnology stocks are also posting strong gains, with Apple leading the hardware sector to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Wednesday. Japan's Nikkei 225 Index rose by 1 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets all ended the day on the upside. While the U.K.'s FTSE 100 Index crept up by 0.2 percent, the German DAX Index and the French CAC 40 Index jumped by 1.7 percent and 2 percent, respectively.

In the bond market, treasuries are seeing moderate weakness ahead of the announcement from the Fed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.8 basis points at 1.989 percent.

by RTT Staff Writer

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