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U.S. Stocks Firmly Positive Ahead Of Fed Minutes


After showing a strong move to the upside early in the session, stocks continue to see considerable strength in mid-day trading on Wednesday. With the upward move, the major averages have more than offset the pullback seen in the previous session.

Currently, the major averages are hovering firmly in positive territory. The Dow is up 285.02 points or 1.1 percent at 26,247.46, the Nasdaq is up 80.09 points or 1 percent at 8,028.65 and the S&P 500 is up 25.45 points or 0.9 percent at 2,925.96.

The initial strength on Wall Street reflected a positive reaction to upbeat earnings news from retail giants Target (TGT) and Lowe's (LOW).

Shares of Target have spiked by 19.7 percent after the retailer reported better than expected second quarter results and raised its full-year earnings guidance.

Home improvement retailer Lowe's has also surged up by 9.8 percent after reporting second quarter results that exceeded analyst estimates on both the top and bottom lines.

The better than expected results from the retailers have added to optimism that strength in consumer spending will continue to support the U.S. economy despite early indicators of a looming recession.

Positive sentiment was also generated by a report from the National Association of Realtors showing a notable rebound in existing home sales in the month of July.

NAR said existing home sales jumped by 2.5 percent to an annual rate of 5.42 million in July after slumping by 1.3 percent to a revised rate of 5.29 million in June.

Economists had expected existing home sales to surge up by 2.3 percent to a rate of 5.39 million from the 5.27 million originally reported for the previous month.

"Falling mortgage rates are improving housing affordability and nudging buyers into the market," said NAR chief economist Lawrence Yun.

Meanwhile, traders are also looking ahead to the release of the minutes of the Federal Reserve's latest monetary policy announcement this afternoon.

The minute of the Fed's late-July meeting are scheduled to be released at 2 pm ET and may shed additional light on the outlook for interest rates.

The Fed cut interest rates by 25 basis points last month and CME Group's FedWatch tool currently indicates a 98.1 percent chance of another 25 basis point rate cut in September.

Fed Chairman Jerome Powell suggested that the July rate cut should not be seen as "the beginning of a lengthy cutting cycle," but President Donald Trump has been putting intense pressure on the Fed to continue cutting rates.

Sector News

Retail stocks continue to turn in some of the market's best performances in mid-day trading, with Target and Lowe's leading the sector higher.

Reflecting the strength in the sector, the Dow Jones U.S. Retail Index has surged up by 1.9 percent, continuing to recover from the two-month closing low set a week ago.

Significant strength also remains visible among software and computer hardware stocks, with the Dow Jones U.S. Software Index and the NYSE Arca Computer Hardware Index both climbing by 1.5 percent.

Networking, transportation, and biotechnology stocks are also seeing notable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dipped by 0.3 percent, while Hong Kong's Hang Seng Index rose by 0.2 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the French CAC 40 Index surged up by 1.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index jumped by 1.3 percent and 1.1 percent, respectively.

In the bond market, treasuries are seeing modest weakness ahead of the release of the Fed minutes. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 1.567.

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