Stocks Give Back Ground But Remain Mostly Positive - U.S. Commentary

(RTTNews) - After moving sharply higher at the open, stocks have given back some ground but remain mostly positive in mid-day trading on Wednesday. The strength on the day comes on the heels of the sell-off seen over the past several sessions.

Currently, the major averages are holding on to strong gains but well off their highs for the session. The Dow is up 172.60 points or 1.1 percent at 15,839.04, the Nasdaq is up 50.02 points or 1.1 percent at 4,556.51 and the S&P 500 is up 19.91 points or 1.1 percent at 1,887.52.

The initial strength on Wall Street came as traders looked to pick up stocks at reduced levels following the downturn seen over the course of the trading day on Tuesday.

The pullback in the previous session extended the recent sell-off on Wall Street, with the Dow falling to its lowest levels since February of last year, while the Nasdaq and the S&P 500 set new ten-month lows.

In addition to bargain hunting, the markets also benefited from a report from the Commerce Department showing that durable goods orders unexpectedly increased in July.

The report said durable goods orders climbed by 2.0 percent in July after jumping by an upwardly revised 4.1 percent in June. The continued increase surprised economists, who had expected orders to drop by 0.4 percent.

Excluding a sharp increase in orders for transportation equipment, durable goods orders rose by a more modest 0.6 percent in July following a 1.0 percent increase in June.

Additionally, positive sentiment may also have been generated by news China's central bank injected 140 billion yuan into the financial system through its short-term liquidity operations facility.

The move comes after the Peoples' Bank of China lowered interest rates for the fifth time in nine months as part of an ongoing effort to boost growth.

Nonetheless, buying interest has waned since the open amid lingering concerns about developing economies and the outlook for U.S. interest rates.

Sector News

Oil service stocks continue to see substantial strength on the day, with the Philadelphia Oil Service Index up by 4.8 percent. The gain by the index comes after it ended the previous session at its lowest closing level in six years.

The rebound by oil service stocks comes as traders have gone bargain hunting despite a decrease by the price of crude oil, as crude for October delivery is down $0.25 at $39.06 a barrel.

Significant strength also remains visible among electronic storage stocks, as reflected by the 3.3 percent gain being posted by the NYSE Arca Disk Drive Index. The index is bouncing off a two-year closing low.

Railroad, semiconductor, telecom, and chemical stocks are also seeing considerable strength, moving higher along with most of the other major sectors.

However, gold and airline stocks have come under notable selling pressure on the day, limiting the upside for the broader markets.

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 surged up by 3.2 percent, while Hong Kong's Hang Seng Index slumped by 1.5 percent.

Meanwhile, the major European markets all moved to the downside on the day following the rally seen on Tuesday. While the U.K.'s FTSE 100 Index plunged by 1.7 percent, the French CAC 40 Index and the German DAX Index tumbled by 1.4 percent and 1.3 percent, respectively.

In the bond market, treasuries have shown a lack of direction over the course of the trading day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is unchanged at 2.133 percent.