Stocks have shown a notable turnaround over the course of the trading day on Friday after showing a modest move to the downside in early trading. The markets have benefited from a positive reaction to the latest reports out of Europe.
After turning higher over the course of the morning, the major averages have given back some ground in recent trading. The Dow currently remains up 62.68 points or 0.5 percent at 13,120.14, the Nasdaq is up 11.54 points or 0.4 percent at 3,064.94 and the S&P 500 is up 5.47 points or 0.4 percent at 1,407.55.
The turnaround by stocks was partly due to a report from Reuters indicating that the European Central Bank is considering setting yield band targets under a new bond-buying program.
Central bank sources told Reuters that setting a band is an option gaining in favor among central bankers, but the decision would not be made before the ECB's next monetary policy meeting on September 6th.
The markets have also benefited from news of a letter Federal Reserve Chairman Ben Bernanke sent to Rep. Darrell Issa, R-Calif., defending the Fed's actions to support the economy.
In the letter, which was obtained by the Wall Street Journal, Bernanke also told Issa there is "scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery."
The weakness seen earlier in the session was partly due to a negative reaction to the Commerce Department's report on durable goods orders in the month of July.
While the report showed a much bigger than expected increase in durable goods orders, the increase was largely due to strength in the volatile transportation sector.
Traders also continued to express concerns about the situation in Europe, where Greek Prime Minister Antonis Samaras held a meeting with Chancellor Angela Merkel.
In remarks at a joint press conference, Samaras pledged that Greece will "stick to its commitments and fulfill its obligations" but noted that the debt-plagued nation needs "time to breathe" as it undertakes crucial reforms.
Merkel did not immediately respond to the request for more time to implement reforms but stressed that Germany wants to help Greece remain in the eurozone.
Biotechnology stocks have shown a strong move to the upside on the day, driving the NYSE Arca Biotechnology Index up by 1.1 percent. Earlier in the session, the index reached its best intraday level in almost a month.
Alexion Pharmaceuticals (ALXN) and Nektar Therapeutics (NKTR) are turning in two of the biotech sector's best performances, advancing by 2.7 percent and 2.4 percent, respectively.
Significant strength is also visible among telecom stocks, as reflected by the 1 percent gain being posted by the NYSE Arca North American Telecom Index. Sprint Nextel (S) and Verizon (VZ) are posting notable gains.
Housing, pharmaceutical, and natural gas stocks have also moved to the upside, while considerable weakness remains visible among steel stocks. The NYSE Arca Steel Index is down by 1.4 percent amid concerns about the outlook for global steel demand.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday following the negative lead from Wall Street. Japan's Nikkei 225 Index fell by 1.2 percent, while Hong Kong's Hang Seng Index dropped by 1.3 percent.
Meanwhile, the major European markets moved to the upside going into the close. While the U.K.'s FTSE 100 Index ended the day flat, the French CAC 40 Index closed just above the unchanged line and the German DAX Index rose by 0.3 percent.
In the bond market, treasuries have pulled back to the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is currently unchanged at 1.666 percent after hitting a low of 1.632 percent.
by RTT Staff Writer
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