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Stocks Close Mostly Higher On Various Positive Catalysts - U.S. Commentary

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After experiencing choppy trading for much of the previous session, stocks moved mostly higher during trading on Wednesday. With the gains on the day, the Dow closed higher for the fourth consecutive session, reaching a new record high.

The major averages all ended the day moderately higher. The Dow climbed 77.52 points or 0.5 percent to 17,138.20, the Nasdaq rose 9.58 points or 0.2 percent to 4,425.97 and the S&P 500 advanced 8.29 points or 0.4 percent to 1,981.57.

The strength on Wall Street partly reflected several positive catalysts, including better than expected Chinese economic data, upbeat earnings from Intel (INTC), and merger-and-acquisition news.

Positive sentiment was initially generated by a report from the Chinese National Bureau of Statistics showing stronger than expected second quarter GDP growth.

Annual growth in Chinese industrial production in June and fixed asset investment for the January to June period also came in above estimates.

Traders also reacted positively to quarterly results from Intel, with the semiconductor giant jumping 9.3 percent to a twelve-year closing high.

After the close of trading on Tuesday, Intel reported better than expected second quarter earnings and revenues and provided upbeat guidance.

Shares of Time Warner (TWX) also surged up by 17.1 percent amid news that the entertainment giant rejected an $80 billion dollar takeover bid from 21st Century Fox (FOX).

On the U.S. economic front, the Labor Department released a report showing that producer prices increased by more than expected in the month of June amid a rebound in energy prices.

A separate report from the Federal Reserve said industrial production rose less than expected in June, while the National Association of Home Builders released a report showing that homebuilder confidence improved by more than anticipated in July.

Later in the day, the Fed released its Beige Book, which contains anecdotal evidence on economic conditions from each of the twelve Fed districts.

The Fed said all twelve districts indicated that economic activity continued to expand, with the pace of growth characterized as moderate or modest.

Traders seemed to shrug off Fed Chair Janet Yellen's second day of testimony on Capitol Hill, as her remarks largely mirrored those she delivered yesterday.

Sector News

Gold stocks showed a strong move to the upside on the day, partly offsetting the significant weakness seen in the previous session. The NYSE Arca Gold Bugs Index jumped by 1.8 percent after plunging by 3 percent on Tuesday.

The rebound by gold stocks came amid a modest increase by the price of the precious metal, with gold for August delivery climbing $2.70 to $1,299.80 an ounce.

Optimism about Chinese demand also contributed to significant strength among steel stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Steel Index. The index has moved back within striking distance of the six-month highs set earlier this month.

Software stocks also moved notably higher over the course of the session, driving the Dow Jones Software Index up by 1.6 percent. With the gain, the index reached its best closing level in over thirteen years.

Computer hardware, energy, and semiconductor stocks also moved to the upside on the day, while some weakness was visible among biotech and banking stocks.

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 edged down by 0.1 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1.1 percent, the German DAX Index and the French CAC 40 Index surged up by 1.4 percent and 1.5 percent, respectively.

In the bond market, treasuries showed a lack of direction for much of the session before closing modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.1 basis points to 2.538 percent.

Looking Ahead

Another batch of U.S. economic data is scheduled to be released on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, housing starts, and Philadelphia-area manufacturing activity.

On the earnings front, eBay (BAY), SanDisk (SNDK), and Yum! Brands (YUM) are among the companies reporting their quarterly results after the close of today's trading.

Big-name companies like Morgan Stanley (MS), Mattel (MAT), and UnitedHealth (UNH) are also due to report their results before the start of trading on Thursday.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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