Despite uncertainty about Cyprus and the U.S. Federal Reserve, stocks moved notably higher at the start of trading on Wednesday. The major averages all showed strong moves to the upside after ending the previous session mixed.
The major averages have pulled back off their highs for the young session in the past few minutes but remain in positive territory. The Dow is up 65.35 points or 0.5 percent at 14,521.17, the Nasdaq is up 17.47 points or 0.5 percent at 3,246.57 and the S&P 500 is up 8.10 points or 0.5 percent at 1,556.44.
The early strength on Wall Street comes even as traders keep a close eye on developments in Cyprus after the Mediterranean island nation's parliament rejected a proposed European Union bailout plan that would tax bank deposits.
Traders may be expressing optimism that Cyprus will eventually reach an agreement to avoid default even if it means looking to Russia for a new loan instead of the EU.
"Cyprus will either find new (Russian) sources of capital or it will agree to a slightly modified rescue package," Commerzbank economists Jörg Krämer and Christoph Weil said in a research note. "No one can rule out the possibility of negotiations failing again though."
Traders are also looking ahead to the Federal Reserve's announcement of its latest monetary policy decision at about 2 pm ET. The announcement will be followed by a press conference by Fed Chairman Ben Bernanke.
While the Fed is widely expected to maintain its existing policy, traders will be looking for any indications of when the central bank intends to start winding down its quantitative easing program.
Housing stocks have shown a strong upward move in early trading, driving the Philadelphia Housing Sector Index up by 1.2 percent. With the gain, the index has risen to its best intraday level in well over five years.
Telecom, software, and pharmaceutical stocks are also seeing early strength, although most of the major sectors are showing only modest moves to the upside.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Wednesday, with the Japanese market closed for a public holiday. Hong Kong's Hang Seng Index advanced by 1 percent, while Australia's All Ordinaries Index fell by 0.4 percent.
Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index has edged up by 0.2 percent, the German DAX Index is up by 0.7 percent and the French CAC 40 Index is up by 1.3 percent.
In the bond market, treasuries are giving back some ground after moving notably higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4 basis points at 1.948 percent.
by RTT Staff Writer
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