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Financial Stocks Lead The Way Higher On Wall Street - U.S. Commentary

wallstreet 112014 06jun18

Stocks moved mostly higher over the course of the trading session on Wednesday after initially showing a lack of direction. The strength on the day lifted the Nasdaq to another new record closing high, while the Dow and the S&P 500 both rose to their best closing levels in nearly three months.

The major averages saw further upside going into the close, reaching new highs for the session. The Dow soared 346.41 points or 1.4 percent to 25,146.39, the Nasdaq climbed 51.38 points or 0.7 percent to 7,689.24 and the S&P 500 advanced 23.55 points or 0.9 percent to 2,772.35.

Financial stocks helped to lead the upward move on Wall Street amid a pullback by U.S. treasuries after European Central Bank chief economist Peter Praet indicated the ECB will discuss ending its bond purchasing program at a meeting next week.

Reflecting the strength in the financial sector, the KBW Bank Index jumped by 2.1 percent and the NYSE Arca Broker/Dealer Index advanced by 1.8 percent.

"Next week, the Governing Council will have to assess whether progress so far has been sufficient to warrant a gradual unwinding of our net purchases," Praet said in a speech in Berlin.

He added, "In making its assessment, it will consider the underlying strength of the euro area economy and the pass-through to wage and price formations."

Chemical, steel, and biotechnology stocks also saw considerable strength on the day, while notable weakness was visible among interest-rate sensitive utilities stocks.

Amid ongoing concerns about a global trade war, the Commerce Department released a report this morning showing the U.S. trade deficit unexpectedly narrowed in the month of April.

The Commerce Department said the trade deficit narrowed to $46.2 billion in April from a revised $47.2 billion in March.

Economists had expected the deficit to come in unchanged compared to the $49.0 billion originally reported for the previous month.

A separate report from the Labor Department showed labor productivity in the U.S. increased by less than previously estimated in the first quarter.

The report said labor productivity rose by 0.4 percent in the first quarter compared to the previously estimated 0.7 percent growth. Economists had expected the increase in productivity to be downwardly revised to 0.6 percent.

Meanwhile, the rate of growth in unit labor costs in the first quarter was upwardly revised to 2.9 percent from 2.7 percent. The increase in costs had been expected to be revised to 2.8 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index climbed by 0.5 percent.

Meanwhile, the major European markets turned in another mixed performance on the day. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index both rose by 0.3 percent.

In the bond market, treasuries pulled back following the modest strength seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 5.6 basis points to 2.975 percent.

Looking Ahead

On Thursday, the Labor Department is scheduled to release its report on initial jobless claims in the week ended June 2nd. Jobless claims are expected to inch up to 225,000 from 221,000 in the previous week.

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