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Stocks Firmly Positive In Early Afternoon Trading - U.S. Commentary


After recovering from an initial move to the downside, stocks have moved significantly higher over the course of the trading session on Thursday. The tech-heavy Nasdaq has risen to its best intraday level in well over five months.

The major averages have pulled back off their best levels in recent trading but remain firmly positive. The Dow is up 159.13 points or 0.6 percent at 25,904.80, the Nasdaq is up 72.30 points or 0.9 percent at 7,801.27 and the S&P 500 is up 19.71 points or 0.7 percent at 2,843.94.

Apple (AAPL) has helped to lead the markets higher, with the tech giant jumping by 3.3 percent to its best intraday level in four months.

The advance by Apple comes after Needham upgraded its rating on the company's stock to Strong Buy from Buy, citing "value upside" in Apple's ecosystem.

The initial weakness on Wall Street came as traders continued to react to the Federal Reserve's monetary policy announcement on Wednesday.

Traders initially reacted positively to the dovish tone of the Fed announcement, with the central bank indicating it no longer expects to raise interest rates this year.

Negative sentiment subsequently crept in, however, as investors recognized the Fed's downwardly revised interest rate forecast reflects expectations of slower economic growth.

In his post-meeting press conference, Fed Chairman Jerome Powell warned about the negative impact slowing economic growth in Europe and China will have on the U.S.

Meanwhile, the Labor Department released a report showing a bigger than expected drop in initial jobless claims in the week ended March 16th.

The report said initial jobless claims dropped to 221,000, a decrease of 9,000 from the previous week's revised level of 230,000.

Economists had expected jobless claims to dip to 225,000 from the 229,000 originally reported for the previous week.

A separate report from the Philadelphia Federal Reserve showed regional manufacturing activity rebounded more than expected in March after an unexpected contraction in February.

Additionally, the Conference Board also released a report showing a slightly bigger than expected increase by its reading on leading U.S. economic indicators.

The Conference Board said its leading economic index edged up by 0.2 percent after revised data showed no change in January. Economists had expected the index to inch up by 0.1 percent.

Sector News

Semiconductor stocks have moved sharply higher over the course of the trading session, driving the Philadelphia Semiconductor Index up by 2.9 percent to a nine-month intraday high.

Chipmaker Micron (MU) is leading the sector higher after reporting fiscal second quarter results that beat expectations on both the top and bottom lines.

Substantial strength also remains visible among computer hardware stocks, as reflected by the 2.6 percent jump by the NYSE Arca Computer Hardware Index. The index has reached its best intraday level in over four months.

Housing stocks are also seeing considerable strength in mid-day trading, with the Philadelphia Housing Sector Index spiking by 2.4 percent.

Networking, commercial real estate, and chemical stocks are also seeing notable strength, while banking stocks are extending yesterday's sell-off.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although the Japanese markets were closed for holiday. China's Shanghai Composite Index and South Korea's Kospi both rose by 0.4 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index is down by 0.3 percent, the French CAC 40 Index is up by 0.1 percent and the U.K.'s FTSE 100 Index is up by 1.1 percent.

In the bond market, treasuries have pulled back off their best levels but continue to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.8 basis points at 2.517 percent.

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