Stocks moved notably higher over the course of the trading day on Wednesday, adding to the gains posted in the previous session. The markets benefited from considerable strength that emerged among technology stocks.
The major averages hovered firmly in positive territory in afternoon trading, holding on to strong gains. The Dow rose 103.16 points or 0.8 percent to 12,908.70, the Nasdaq jumped 32.56 points or 1.1 percent to 2,942.60 and the S&P 500 climbed 9.11 points or 0.7 percent to 1,372.78.
The strength on Wall Street was largely due to the rally by tech stocks, which moved sharply higher despite disappointing guidance from semiconductor giant Intel (INTC).
While Intel reported better than expected second quarter earnings after the close of trading on Tuesday, the company also reported weaker than expected revenues and lowered its full year revenue growth outlook. Nonetheless, shares of Intel rose by 3.3 percent.
Tech stocks also benefited from bargain hunting following recent weakness in the sector, with the gain by Intel extending a recovery from the six-month closing low it set last Thursday.
Buying interest was also generated by a report released by the Commerce Department before the start of trading showing a bigger than expected rebound in housing starts in the month of June.
The report showed that housing starts jumped 6.9 percent to an annual rate of 760,000 in June from the revised May estimate of 711,000. Economists had expected housing starts to climb to 745,000 from the 708,000 originally reported for the previous month.
On the other hand, building permits, an indicator of future housing demand, fell by 3.7 percent to an annual rate of 755,000 in June from the revised May rate of 784,000.
In other economic news, the Fed's Beige Book report said overall economic activity continued to expand at a modest to moderate pace in June and early July.
The report also said employment levels grew at a tepid pace since the last report and noted that price inflation was modest across most areas of the country. Looking ahead, the Fed said contacts remained cautiously optimistic about future business conditions.
Traders also kept an eye on Federal Reserve Chairman Ben Bernanke's second day of testimony on Capitol Hill, with the Fed Chief facing questions from the House Financial Services Committee.
Bernanke's prepared remarks were unchanged from those he delivered to the Senate Banking Committee on Tuesday. He reiterated that the Fed is prepared to take further action if necessary and continued to urge Congress to address the upcoming fiscal cliff.
Semiconductor stocks turned in some of the tech sector's best performances, resulting in a 3.6 percent gain by the Philadelphia Semiconductor Index. With the gain, the index bounced well off the seven-month closing low it set in the previous session.
NXP Semiconductors (NXPI) and Mellanox Technologies (MLNX) posted standout gains within the semiconductor sector, jumping by 9.1 percent and 6.7 percent, respectively.
Networking and computer hardware stocks also saw considerable strength on the day. The NYSE Arca Networking Index advanced by 2.9 percent, while the NYSE Arca Computer Hardware Index surged up by 2.7 percent.
While buying interest outside of the tech sector was more subdued, significant strength was visible among defense, oil service, and health insurance stocks.
On the other hand, airline, brokerage, and gold stocks showed notable moves to the downside over the course of the trading day.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. While Japan's Nikkei 225 Index edged down by 0.3 percent, China's Shanghai Composite Index advanced by 0.4 percent.
Meanwhile, the major European markets all showed strong moves to the upside on the day. The U.K.'s FTSE 100 Index jumped by 1 percent, while the German DAX Index and the French CAC 40 Index surged up by 1.6 percent and 1.8 percent, respectively.
In the bond market, treasuries showed a modest move back to the upside after giving back some ground in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slipped 2.2 basis points to 1.479 percent.
U.S. economic data may attract some attention on Thursday, with several key reports scheduled to be released. Traders are likely to keep an eye on the reports on weekly jobless claims, existing home sales, and Philadelphia-area manufacturing activity.
On the earnings front, American Express (AXP), IBM Corp. (IBM), eBay (EBAY), Qualcomm (QCOM) and Yum! Brands (YUM) are among the companies releasing their quarterly results after the close of today's trading.
by RTT Staff Writer
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