Stocks have moved to the upside in early trading on Wednesday, benefiting from a positive reaction to the latest news out of Europe. The major averages have moved moderately higher, adding to the gains posted in the previous session.
The major averages have pulled back off their highs for the young session in the past few minutes but are holding on to gains. The Dow is up 44.82 points or 0.3 percent at 13,368.18, the Nasdaq is up 12.05 points or 0.4 percent at 3,116.58 and the S&P 500 is up 5.35 points or 0.4 percent at 1,438.91.
The early strength on Wall Street comes on the heels of news that Germany's Federal Constitutional Court cleared the way for the ratification of the European Stability Mechanism, or ESM, rejecting temporary injunctions against the European bailout fund.
At the same time, the court imposed certain conditions, including capping Germany's liability. The court said Germany must cap its bailout fund liability at 190 billion euros and said further expansion of the country's share needs to get the backing of Parliament.
Peter Boockvar, managing director at Miller Tabak, said, "Buy the rumor, buy the news continues to be the market pattern as long as participants have their central bank beer goggles on which turns all news into good news."
"The German Constitutional Court did what all expected them to do and blessed the ESM but did put a 190 billion euro limit on Germany's exposure that can only be exceeded with parliamentary approval," he added. "All the other 16 euro nations have approved the ESM."
While the news out of Germany has generated some positive sentiment, buying interest has remained somewhat subdued as traders look ahead to the Federal Reserve's monetary policy announcement on Thursday.
Uncertainty about whether the central bank will announce another round of quantitative easing is keeping some traders on the sidelines.
Nonetheless, networking stocks have shown a strong upward move in early trading, driving the NYSE Arca Networking Index up by 1.6 percent. Alcatel-Lucent (ALU) has helped to lead the sector higher, surging up by 4.3 percent.
Airline, housing, and steel stocks are also seeing notable strength, moving to the upside along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 1.7 percent, while Hong Kong's Hang Seng Index advanced by 1.1 percent.
The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index and the German DAX Index are up by 0.4 percent and 0.6 percent, respectively.
In the bond market, treasuries have come under pressure following the news out of Germany. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.7 basis points at 1.752 percent.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org