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U.S. Stocks Moving Sharply Higher After Early Volatility

wallstreet july26 17mar20

After seeing considerable volatility early in the session, stocks have moved sharply higher over the course of the trading day on Tuesday. With the strong upward move, the major averages are partly offsetting the steep losses posted in the previous session.

The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 1,124.23 points or 5.6 percent at 21,312.75, the Nasdaq is up 480.44 points or 7 percent at 7,385.03 and the S&P 500 is up 161.08 points or 6.8 percent at 2,547.21.

The rally on Wall Street is partly due to bargain hunting, with traders picking up stocks at reduced levels following the sell-off seen on Monday.

The Dow saw its biggest percentage drop since the stock market crash of 1987, as traders shrugged off the Federal Reserve's decision to slash interest rates in an effort to contain the economic fallout from the coronavirus pandemic.

Positive sentiment was also generated in reaction to President Donald Trump's pledge to support industries that have been hit particularly hard by the outbreak, such as airlines.

"The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!" Trump said in a post on Twitter.

Treasury Secretary Steven Mnuchin also said during a press briefing this morning that the administration is hoping to get cash into Americans' pockets "immediately."

In U.S. economic news, the Commerce Department released a report showing an unexpected decrease in retail sales in the month of February.

The Commerce Department said retail sales fell by 0.5 percent in February after climbing by an upwardly revised 0.6 percent in January.

The pullback came as a surprise to economists, who had expected retail sales to edge up by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Excluding a 0.9 percent decrease in auto sales, retail sales still slid by 0.4 percent in February after rising by an upwardly revised 0.6 percent in January. Ex-auto sales had been expected to tick up by 0.2 percent.

Meanwhile, a separate report from the Federal Reserve showed industrial production rebounded by more than anticipated in the month of February.

The Fed said industrial production climbed by 0.6 percent in February after falling by a downwardly revised 0.5 percent in January.

Economists had expected industrial production to increase by 0.4 percent compared to the 0.3 percent drop originally reported for the previous month.

The National Association of Home Builders also released a report showing homebuilder confidence has deteriorated by slightly more than anticipated in the month of March.

The report said the NAHB/Wells Fargo Housing Market Index fell to 72 in March after edging down to 74 in February. Economists had expected the index to dip to 73.

NAHB Chief Economist Robert Dietz noted more than half of the builder responses were collected prior to March 4, so the recent stock market declines and the rising economic impact of the coronavirus will be reflected more in next month's report.

Sector News

Gold stocks continue to see substantial strength in mid-day trading, with the NYSE Arca Gold Bugs Index soaring by 10.6 percent. The index continues to rebound after hitting its lowest intraday level in over a year in early trading on Monday.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for April delivery jumping $44.10 to $1,530.60 an ounce.

Significant strength also remains visible among utilities stocks, as reflected by the 11.9 percent spike by the Dow Jones Utility Average. With the surge, the average is bouncing off its lowest closing level in well over a year.

Software, retail, semiconductor and transportation stocks have also moved sharply higher over the course of the session, reflecting broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index fell by 0.3 percent.

Meanwhile, European stocks have seen considerable volatility on the day and are currently sharply higher. While the German DAX Index is up by 1.3 percent, the U.K.'s FTSE 100 Index is up by 1.6 percent and the French CAC 40 Index is up by 1.8 percent.

In the bond market, treasuries are giving back ground following the significant rebound seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 11.7 basis points at 0.845 percent.

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