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Stocks Remain Mostly Positive In Mid-Day Trading - U.S. Commentary


After turning positive earlier in the session, stocks remain mostly higher in mid-day trading on Wednesday. With the upward move on the day, the major averages are adding to the gains posted in the three previous sessions.

The Dow has been bouncing back and forth across the unchanged line but is currently up 8.40 points or less than a tenth of a percent at 24,648.85. The Nasdaq is up 66.26 points or 0.9 percent at 7,079.77 and the S&P 500 is up 12.57 points or 0.5 percent at 2,675.51.

Stocks initially moved lower following the release of a report from the Labor Department showing a bigger than expected increase in consumer prices in the month of January.

The Labor Department said its consumer price index climbed by 0.5 percent in January after edging up by a revised 0.2 percent in December.

Economists had expected consumer prices to rise by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in January after inching up by 0.2 percent in December. Core prices had been expected to increase by 0.2 percent.

Compared to the same month a year ago, consumer prices were up by 2.1 percent in January, while core consumer prices were up by 1.8 percent.

"Once temporary factors drop out of the annual comparison in the spring, core CPI inflation will be close to 2.5% and we expect it to trend higher from there," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "We expect that will force the Fed to raise rates a total of four times this year, beginning with a 25bp rise in interest rates at the March FOMC meeting."

A separate report from the Commerce Department showed an unexpected decrease in retail sales in the month of January.

The Commerce Department said retail sales fell by 0.3 percent in January compared to economist estimates for a 0.2 percent uptick in sales.

Revised data showed that retail sales were unchanged in December compared to the previously reported 0.4 percent increase.

Excluding a decrease in sales by motor vehicle and parts dealers, retail sales were unchanged in January after inching up by 0.1 percent in December. Ex-auto sales had been expected to climb by 0.4 percent.

Sector News

Gold stocks continue to turn in some of the market's best performances in mid-day trading, with the NYSE Arca Gold Bugs Index surging up by 3.8 percent. The index continues to regain ground after ending last Friday's trading at its lowest closing level in over a year.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for April delivery surging up $19.10 to $1,349.50 an ounce.

Significant strength also remains visible among biotechnology stocks, as reflected by the 2.1 percent gain being posted by the NYSE Arca Biotechnology Index.

Computer hardware, banking and semiconductor stocks are also seeing considerable strength on the day, while real estate stocks have come under pressure.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index jumped by 2.3 percent.

Meanwhile, the major European markets all moved higher on the day. While the U.K.'s FTSE 100 Index advanced by 0.6 percent, the French CAC 40 Index and the German DAX Index surged up by 1.1 percent and 1.2 percent, respectively.

In the bond market, treasuries have moved notably lower following the release of the inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.7 basis points at 2.897 percent.

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