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Major Averages Hovering In Positive Territory - U.S. Commentary


Buying interest has waned from earlier in the session but stocks remain mostly positive in mid-day trading on Wednesday. The upward move on the day has lifted the major averages to new record intraday highs.

Currently, the major averages are hovering in positive territory. The Dow is up 37.73 points or 0.2 percent at 24,861.74, the Nasdaq is up 42.66 points or 0.6 percent at 7,049.56 and the S&P 500 is up 11.05 points or 0.4 percent at 2,706.86.

The continued strength on Wall Street comes as upbeat data has added to recent optimism about the economic outlook.

A report released by the Institute for Supply Management showed growth in manufacturing activity unexpectedly accelerated in the month of December.

The ISM said its purchasing managers index rose to 59.7 in December from 58.2 in November, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to edge down to 58.1.

"This indicates growth in manufacturing for the 16th consecutive month, led by strong expansion in new orders and production," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

A separate report from the Commerce Department showed a bigger than expected increase in construction spending in the month of November.

The Commerce Department said construction spending climbed by 0.8 percent to an annual rate of $1.257 trillion in November from a revised $1.247 trillion in October. Economists had expected spending to rise by 0.5 percent.

Later in the day, the Federal Reserve is scheduled to release the minutes of its latest monetary policy meeting held in December.

The minutes of the latest Fed meeting may shed additional light on the outlook for interest rates in the new year.

Sector News

Oil service stocks are seeing considerable strength in mid-day trading, with the Philadelphia Oil Service Index jumping by 2.1 percent. With the gain, the index has reached its best intraday level in over seven months.

The strength among oil service stocks comes amid a notable increase by the price of crude oil, as crude for February delivery is surging up $1.07 to $61.44 a barrel.

Significant strength also remains visible among housing stocks, as reflected by the 1.6 percent advance by the Philadelphia Housing Sector Index. The index has risen to a record intraday high.

Biotechnology, computer hardware, and semiconductor stocks are also seeing notable strength on the day, while airline and gold stocks have moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday, although the Japanese markets remained closed. China's Shanghai Composite Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index and the German DAX Index both climbed by 0.8 percent.

In the bond market, treasuries have moved higher following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.5 basis points at 2.440 percent.

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