Stocks Close Sharply Higher Amid Optimism About Brexit Vote - U.S. Commentary

(RTTNews) - With voting underway in the U.K. on whether Britain will remain in the European Union, stocks moved sharply higher during trading on Thursday. The rally on the day more than offset the modest pullback seen in the previous session.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 230.24 points or 1.3 percent to 18,011.07, the Nasdaq soared 76.72 points or 1.6 percent to 4,910.04 and the S&P 500 surged up 27.87 points or 1.3 percent to 2,113.32.

The buying interest on Wall Street reflected optimism that voters will oppose the so-called Brexit, although the results of the vote will not be known until much later.

Capital Economics noted that the last few opinion polls appear to have largely convinced the markets that the U.K. will vote to remain in the EU.

"Despite how close most of the polls are, betting markets - which have consistently favored Remain - are increasingly confident that voters will choose to stay in the EU," Capital Economics said in a note.

The firm added, "Movements in financial markets have also reflected betting markets' view that a Brexit is looking increasingly unlikely."

Amid the focus on the Brexit vote, traders shrugged off a batch of U.S. economic data, including a Commerce Department report showing a pullback in new home sales in May.

The report said new home sales fell by 6.0 percent to an annual rate of 551,000 in May from the downwardly revised April rate of 586,000.

While the April rate was downwardly revised, it still represents the highest rate of new home sales since February of 2008.

A separate report from the Labor Department said initial jobless claims fell to a nearly two-month low last week, while the Conference Board reported an unexpected drop by its index of leading economic indicators in May.

Sector News

After falling sharply in the previous session, electronic storage stocks showed a substantial move back to the upside. The NYSE Arca Disk Drive surged up by 5.2 percent after plunging by 4 percent on Wednesday.

Micron Technology (MU) led the storage sector higher, jumping by 10.5 after Nomura upgraded its rating on the company's stock to Buy from Reduce.

Financial stocks also significant strength on the day, with the NYSE Arca Broker/Dealer Index and the Dow Jones Banks Index advancing by 2.9 percent and 2.8 percent, respectively.

Notable strength was also visible among energy stocks, which moved higher as crude oil for August delivery climbed $0.98 to $50.11 a barrel.

Steel, semiconductor, biotechnology, and telecom stocks also saw considerable strength, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Thursday. Japan's Nikkei 225 Index surged up by 1.1 percent, while China's Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1.2 percent, the German DAX Index shot up by 1.9 percent and the French CAC 40 Index soared by 2 percent.

In the bond market, treasuries moved notably lower amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.4 basis points to 1.739 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the outcome of the Brexit vote, with the final results expected to be revealed overnight.

The results of referendum may overshadow the release of U.S. reports on durable goods orders and consumer sentiment.