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Major Averages Climb Firmly Into Positive Territory - U.S. Commentary


Stocks have moved mostly higher over the course of morning trading on Wednesday, with the major averages all climbing firmly into positive territory after ending the previous session on opposite sides of the unchanged line.

Currently, the major averages are holding on to notable gains. The Dow is up 118.29 points or 0.5 percent at 25,672.95, the Nasdaq is up 49.18 points or 0.7 percent at 7,640.21 and the S&P 500 is up 16.81 points or 0.6 percent at 2,808.33.

The strength on Wall Street partly reflects a positive reaction to a Commerce Department report showing an unexpected increase in durable goods orders in the month of January.

The report said durable goods orders climbed by 0.4 percent in January after spiking by an upwardly revised 1.3 percent in December. Economists had expected durable goods orders to drop by 0.5 percent.

However, the increase in durable goods orders was largely due to a continued surge in orders for transportation equipment, which could nosedive in the comings months as aerospace giant Boeing (BA) deals with the second crash of one of its 737 Max 8 jets in less than six months.

Excluding the jump in orders for transportation equipment, durable goods orders edged down by 0.1 percent in January after rising by an upwardly revised 0.3 percent in December.

Ex-transportation orders had been expected to inch up by 0.1 percent, matching the uptick originally reported for the previous month.

Meanwhile, the Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending, climbed by 0.8 percent in January after slumping by 0.9 percent in December.

A separate report from the Labor Department showed a modest increase in producer prices in the month of February.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in February after edging down by 0.1 percent in January. Economists had expected prices to rise by 0.2 percent.

Excluding food and energy prices, core producer prices also ticked up by 0.1 percent in February after climbing by 0.3 percent in the previous months. Core prices were also expected to increase by 0.2 percent.

The report also said the annual rate of consume price growth slowed to 1.5 percent in February from 1.6 percent in November, while the annual rate of core consumer price growth edged down to 2.1 percent from 2.2 percent.

"The rebound in underlying capital goods orders in January stands out as a positive amid the recent flood of downbeat activity data, but it is still consistent with a gradual slowdown in business equipment investment growth in the first quarter," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "And with the February producer price figures showing that pipeline inflationary pressures remain subdued, there is still a strong case for the Fed to remain patient."

Energy stocks are turning in some of the market's best performances in morning trading, benefiting from a significant increase by the price of crude oil.

Crude for April delivery is jumping $1.08 to $57.95 a barrel following the release of a report showing an unexpected weekly drop in crude oil inventories.

Biotechnology, transportation, and tobacco 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 lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1 percent, while Hong Kong's Hang Seng Index dropped by 0.4 percent.

Meanwhile, the major European markets have moved modestly higher on the day. While the French CAC 40 Index has risen by 0.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.1 percent.

In the bond market, treasuries are giving back ground after moving notably higher in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by nearly a basis point at 2.614 percent.

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