While buying interest has waned from earlier in the session, stocks remain mostly positive in mid-day trading on Wednesday. The latest news out of Europe helped to drive stocks higher, but uncertainty about the U.S. Federal Reserve has limited the upside for the markets.
The major averages are currently posting modest gains, well off their highs for the session. The Dow is up 29.64 points or 0.2 percent at 13,353.00, the Nasdaq is up 6.82 points or 0.2 percent at 3,111.35 and the S&P 500 is up 3.50 points or 0.2 percent at 1,437.06.
News of the German Federal Constitutional Court's decision clearing the way for the ratification of the European Stability Mechanism helped to drive stocks higher in early trading, with the court 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."
Buying interest waned not long after the open, however, with many traders reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Thursday.
Uncertainty about whether the central bank will announce another round of quantitative easing helped to keep many traders on the sidelines.
Stocks have subsequently pulled back well off their best levels of the day but continue to see modest strength amid optimism about further stimulus.
While many of the major sectors are showing only modest moves in mid-day trading, significant strength remains visible among housing stocks. Reflecting the strength in the housing sector, the Philadelphia Housing Sector Index is up by 2.1 percent after reaching a four-year intraday high.
PulteGroup (PHM) and M/I Homes (MHO) are turning in two of the housing sector's best performances, advancing by 6.4 percent and 5.3 percent, respectively.
Networking stocks also continue to see considerable strength on the day, with the NYSE Arca Networking Index up by 1.6 percent. Juniper Networks (JNPR) and Alcatel-Lucent (ALU) are posting standout gains.
Airline, telecom, and brokerage stocks are also holding on to notable gains, while weakness has emerged among health insurance and tobacco stocks.
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.
Meanwhile, the major European markets turned in another mixed performance on the day. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the French CAC 40 Index inched up by 0.2 percent and the German DAX Index rose by 0.5 percent.
In the bond market, treasuries continue to see notable weakness 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 basis points at 1.745 percent.
by RTT Staff Writer
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