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Stocks Seeing Modest Strength On Upbeat Economic Data - U.S. Commentary


While buying interest remains somewhat subdued, stocks are seeing modest strength in mid-day trading on Friday. The markets are benefiting from a positive reaction to some relatively upbeat economic data.

The major averages have moved to the upside in recent trading, reaching new highs for the session. The Dow is up 29.76 points or 0.2 percent at 13,421.12, the Nasdaq is up 3.85 points or 0.1 percent at 3,104.42 and the S&P 500 is up 5.07 points or 0.4 percent at 1,464.44.

The modest strength on Wall Street comes following the release of a report from the Labor Department showing that U.S. employment increased in line with economist estimates in the month of December.

The report showed that non-farm payroll employment increased by 155,000 jobs in December following an upwardly revised increase of 161,000 jobs in November.

Economists had expected employment to increase by about 155,000 jobs compared to the addition of 146,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate came in at 7.8 percent in December, unchanged from the previous month's revised figure.

A separate report from the Institute for Supply Management showed that economic activity in the U.S. service sector unexpectedly expanded at a faster rate in December.

The ISM said its non-manufacturing index climbed to 56.1 in December from 54.7 in November, with a reading above 50 indicating growth in the service sector. The increase surprised economists, who had expected the index to edge down to 54.5.

With the unexpected increase, the non-manufacturing index rose to its highest level since reaching 57.3 in February of 2012.

However, traders seem somewhat reluctant to continue buying stocks after the rally that was seen earlier in the week lifted the major averages to their best levels in over two months.

Traders also continue to digest yesterday's release of the minutes of the latest Federal Reserve meeting, which suggested that the central bank could end its quantitative easing program earlier than anticipated.

Sector News

While many of the major sectors are showing only modest moves, considerable strength has emerged among networking stocks. The NYSE Arca Networking Index has surged up by 2.2 percent to an eight-month intraday high.

Acme Packet (APKT) and Alcatel-Lucent (ALU) are turning in two of the networking sector's best performances, jumping by 11 percent and 8.9 percent, respectively.

Healthcare provider stocks have also shown a strong move to the upside on the day, driving the Morgan Stanley Healthcare Provider Index up by 1.8 percent. With the gain, the index has risen to a record intraday high.

Transportation and energy stocks also seeing significant strength in mid-day trading, while gold stocks have come under pressure amid a sharp drop by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index surged up by 2.8 percent in its first trading day of the new year, Hong Kong's Hang Seng Index fell by 0.3 percent.

Meanwhile, the major European markets all moved to the upside over the course of the session. The U.K.'s FTSE 100 Index advanced by 0.7 percent, while the German DAX Index and the French CAC 40 Index rose by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries are seeing continued weakness, extending the sharp downward move seen in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has risen by 3.6 basis points to 1.935 percent.

by RTTNews Staff Writer

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