While buying interest has remained relatively subdued, stocks have moved modestly higher over the course of the trading day on Wednesday. The markets have benefited from a positive reaction to news out of Japan as well as U.S. housing data.
The major averages have moved roughly sideways in recent trading, clinging to slim gains. The Dow is up 44.02 points or 0.3 percent at 13,608.66, the Nasdaq is up 4.10 points or 0.1 percent at 3,181.90 and the S&P 500 is up 4.14 points or 0.3 percent at 1,463.46.
The modest strength that has emerged on Wall Street is partly due to news of additional stimulus from the Bank of Japan, although the move is largely seen as symbolic.
The Bank of Japan increased its asset purchase program by 10 trillion yen, but the purchases are exclusively earmarked for 2013.
In a research note, Capital Economics said, "The Bank of Japan surprised markets today with a move that gave the impression of coordinated easing by the major global central banks, providing a welcome boost to confidence."
"However, we had already expected them to ease by this amount in October, so although the timing is slightly earlier than we (and most others) had anticipated, it is not a game changer," the firm added.
Traders are also digesting a mixed batch of U.S. housing data, including a report from the Commerce Department showing that housing starts rebounded in August but still came in below economist estimates.
The Commerce Department said housing starts rose 2.3 percent to an annual rate of 750,000 in August from the revised July estimate of 733,000. Economists had expected starts to climb to 768,000 from the 746,000 originally reported for the previous month.
Building permits, an indicator of future housing demand, fell 1.0 percent to an annual rate of 803,000 in August from 811,000 in July.
A separate report from the National Association of Realtors showed that existing home sales jumped by more than expected in August, reaching their highest level since May of 2010.
NAR said existing home sales jumped 7.8 percent to an annual rate of 4.82 million in August from 4.47 million in July. Economists had expected existing home sales to climb to an annual rate of 4.55 million.
Chris Low, chief economist at FTN Financial, said, "Bear in mind this report, and this morning's housing starts, pre-date the Fed's QE3 mortgage purchase announcement. The Fed's help for housing comes on top of a recovery already in progress."
"Housing is not booming, but it is improving and will continue to do so in part because the Fed is determined to drive mortgage rates to new historic lows," he added.
Among individual stocks, Cracker Barrel (CBRL), AutoZone (AZO), and General Mills (GIS) are all posting notable gains after reporting their quarterly results before the start of trading.
While most of the major sectors continue to show only modest moves, airline stocks are seeing considerable strength on the day. The NYSE Arca Airline Index has surged up by 2.6 percent, more than offsetting the notable loss it posted on Tuesday.
United Continental (UAL) and US Airways (LCC) are turning in two of the airline sector's best performances, jumping by 6.5 percent and 5.9 percent, respectively.
Significant strength has also emerged among housing stocks, as reflected by the 2.2 percent gain being posted by the Philadelphia Housing Sector Index. The strength in the sector reflects a positive reaction to today's housing data.
Trucking, banking, and gold stocks have also moved to the upside, with gold stocks benefiting from an increase by the price of the precious metal.
On the other hand, notable weakness remains visible among railroad and oil service stocks. The losses by oil service stocks come as the price of crude oil is tumbling by more than $3 a barrel.
In overseas trading, stock markets across the Asia-Pacific region moved to the upside on Wednesday following the news from the Bank of Japan. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day up by 1.2 percent.
The major European markets also moved to the upside over the course of the trading day. The U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index climbed 0.5 percent, and the German DAX Index advanced by 0.6 percent.
In the bond market, treasuries have moved higher, extending the upward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 1.78 percent.
by RTT Staff Writer
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