Stocks remain up by notable margins in early afternoon trading on Wednesday, as a pickup in both U.S. and Chinese manufacturing activity along with a strong reading on Australian GDP has elevated hopes of a continued global economic recovery.
The major averages have moved off their highs for the session in recent trading but remain firmly positive. The Dow is currently up 235.04 points or 2.4 percent at 10,249.76, the Nasdaq is up 56.45 points or 2.7 percent at 2,170.48 and the S&P 500 is up 28.00 points or 2.7 percent at 1,077.33.
Shortly after the start of trading, the Institute for Supply Management reported that its index of U.S. manufacturing activity rose to 56.3 in August from 55.5 in July, with a reading above 50 indicating growth in the sector. The increase came as a surprise to economists, who had expected the index to fall to a reading of 52.9.
Stocks started the day sharply higher after data from China showed that manufacturing activity rose in August, ending a two-month contraction. Markit Economics said the HSBC manufacturing purchasing managers' index came in at a seasonally adjusted 51.9, up from 49.4 in July. A reading above 50 indicates expansion.
Sentiment was also helped higher by a report from the Australian Bureau of Statistics showing that Australian GDP rose by 1.2 percent in the second quarter compared to the 0.7 percent growth seen in the previous quarter. Economists had expected the economy to grow by 0.9 percent for the period.
Meanwhile, the day's second-tier economic data from the U.S. has seen little reaction in the equity markets thus far. The Commerce Department said that construction spending fell by 1.0 percent in July, which was steeper than expected.
Automatic Data Processing, Inc. (ADP) also reported that private sector employment fell by 10,000 jobs in August, while economists had forecast an increase of 13,000 jobs.
Sector News
Steel stocks remain among the day's best performers, with the NYSE Arca Steel Index up by 4.9 percent. The upward move has helped the index to offset a part of its recent losses while setting a two-week in intraday high.
Oil service stocks are close behind, with the Philadelphia Oil Service Sector Index up by 4.6 percent as the price of oil is up by $2.30 to $74.22 a barrel.
The upward move by oil service stocks and the price of oil comes even as crude oil inventories rose by 3.4 million barrels in the week ended August 27th, according to data from the Energy Information Administration, with the increase well above the 1.2 million barrel increase forecast by analysts.
Defense stocks are also posting strong gains, boosting the Philadelphia Defense Sector Index up by 3.5 percent. The upward move is lifting the index off of the nearly eleven-month closing low set in the previous session.
Electronic storage, healthcare provider, railroad and airline stocks are also notably higher, while some weakness remains visible among gold stocks amid the day's risk appetite.
Stocks In The News
On the corporate front, shares of Burger King (BKC) are notably higher following a report from the Wall Street Journal that said the firm has discussed a buyout by private sector entities. The stocks has shot up by 14.6 percent and is on pace for a two and a half month closing high.
PerkinElmer (PKI) is also trading higher after the firm agreed to sell its illumination and detection solutions business to private equity firm Veritas Capital Fund III L.P. for $500 million in cash. The company also updated its guidance and now expects third quarter earnings in a range of $0.27-$0.29 per share. The stock has gained 2.8 percent but remains rangebound.
Other Markets
Overseas, stock markets in the Asia-Pacific region saw a partial rebound from Tuesday's sell-off. Japan's benchmark Nikkei 225 Index gained 1.2 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.
The major European markets also saw a notable rally. The French CAC 40 Index shot up by 3.8 percent while the German DAX Index and the U.K.'s FTSE 100 Index both jumped by 2.7 percent.
In the bond markets, treasuries remain notably lower amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.591 percent, posting a gain of 11.4 basis points.
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