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Stocks Extending Upward Move In Morning Trading - U.S. Commentary

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Following the rally seen over the course of the previous session, stocks are seeing further upside in morning trading on Wednesday. With the continued upward move, the major averages have reached their best intraday levels in over two months.

Currently, the major averages remain firmly in positive territory. The Dow is up 190.13 points or 0.8 percent at 25,615.89, the Nasdaq is up 30.47 points or 0.4 percent at 7,445.09 and the S&P 500 is up 15.46 points or 0.6 percent at 2,760.19.

Optimism about avoiding another government shutdown has generated continued buying interest on Wall Street, as President Donald Trump said he was "not happy" with a tentative deal reached by lawmakers but did not specifically reject the proposal.

The agreement includes far less money for physical barriers on the border than Trump has demanded, although political observers have suggested the president will likely want to avoid another damaging shutdown.

Trump has argued Democrats will be to blame for another shutdown, although the public may disagree as his controversial border wall remains the key sticking point in negotiations.

The markets are also benefiting from continued optimism about U.S.-China trade talks after Trump indicated he is willing to delay raising tariffs on Chinese goods if the two sides are close to a deal.

A report from the South China Morning Post said Chinese President Xi Jinping is scheduled to meet U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin during this week's talks in Beijing.

The meeting with Xi as well as a banquet for the U.S. delegation would be a sign of goodwill to cement a trade deal between the world's two biggest economies, the SCMP said.

On the U.S. economic front, the Labor Department released a report showing consumer prices were unchanged for the third straight month in January.

The Labor Department said its consumer price index was unchanged in January, matching the revised reading for December. Economists had expected consumer prices to inch up by 0.1 percent.

Excluding food and energy prices, core consumer prices rose by 0.2 percent for the fifth consecutive month. The uptick in core prices matched economist estimates.

The Labor Department said the annual rate of consume price growth slowed to 1.6 percent in January from 1.9 percent in December, showing the slowest rate of growth since June of 2017.

Meanwhile, the report said the annual rate of core consumer price growth was unchanged from the two previous months at 2.2 percent.

"Overall, these data support our baseline view of a well-behaved inflationary environment that provides the Fed room to pause before raising rates again," said Gregory Daco, Chief U.S. Economist at Oxford Economics.

He added, "We look for the Fed to pause throughout the first half of the year to assess the economic landscape before likely raising rates again in Q3."

Energy stocks have helped to lead the markets higher, benefiting from a sharp increase by the price of crude oil. Crude for March delivery is jumping $1.26 to $54.36 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 2.6 percent, the NYSE Arca Natural Gas Index is up by 1.8 percent and the NYSE Arca Oil Index is up by 1.6 percent.

Computer hardware and biotechnology stocks are also seeing notable strength, while most of the other major sectors are showing more modest moves to the upside.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 1.3 percent, while China's Shanghai Composite Index spiked by 1.8 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has jump by 1 percent, the French CAC 40 Index and the German DAX Index are up by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries are moving lower for the third consecutive session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.2 basis points at 2.706 percent.

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