Stocks Regaining Ground Following Recent Weakness - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have moved mostly higher over the course of the trading day on Tuesday. With the upward move, the major averages are partly offsetting the weakness seen over the past several sessions.

The major averages have seen some further upside in recent trading, reaching new highs for the young session. The Dow is up 120.03 points or 0.7 percent at 17,560.62, the Nasdaq is up 27.15 points or 0.5 percent at 5,066.93 and the S&P 500 is up 16.69 points or 0.8 percent at 2,084.33.

The strength that has emerged on Wall Street is partly due to bargain hunting following the sharp pullback seen over the five previous sessions.

With the continued drop seen during trading on Monday, the Dow ended the session at its lowest closing level in almost six months.

A positive reaction to the latest earnings news from some big-name companies has also generated some buying interest.

Shares of UPS (UPS) have moved sharply higher after the delivery giant reported second quarter earnings that exceeded analyst estimates.

Auto giant Ford (F) and drug giant Pfizer (PFE) are also posting notable gains after reporting better than expected second quarter earnings. Pfizer also raised its full-year guidance.

Meanwhile, traders are also looking ahead to the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

The Fed is widely expected to leave rates unchanged, but traders will closely analyze the accompanying statement for hints regarding an interest rate hike in September.

On the U.S. economic front, the Conference Board released a report showing a substantial deterioration in consumer confidence in the month of July.

The Conference Board said its consumer confidence index tumbled to 90.9 in July from 99.8 in June. Economists had expected the index to show a much more modest decrease to a reading of 99.6.

Sector News

Steel stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 3.7 percent. With the gain, the index is bouncing well off the six-year closing low set in the previous session.

Cliffs Natural Resources (CLF) has helped to lead the sector higher, jumping by 17.1 percent ahead of the release of its second quarter results on Wednesday.

Considerable strength has also emerged among energy stocks, which are moving higher along with the price of crude oil. Crude for September delivery is currently climbing $0.89 to $48.28 a barrel, rebounding from a found-month low.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index has surged up by 3.5 percent, while the NYSE Arca Oil & Gas Index is up by 2.7 percent.

Railroad stocks are also seeing significant strength in mid-day trading, with the Dow Jones Railroads Index jumping by 3.2 percent. Kansas City Southern (KSU) and Union Pacific (UNP) are posting standout gains.

Tobacco, trucking, and semiconductor stocks have also shown strong moves to the upside on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved lower on Tuesday. Japan's Nikkei 225 Index edged down by 0.1 percent, while China's Shanghai Composite Index tumbled by 1.7 percent. However, Hong Kong's Hang Seng Index bucked the downtrend and rose by 0.6 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.8 percent, the French CAC 40 Index and the German DAX Index jumped by 1 percent and 1.1 percent, respectively.

In the bond market, treasuries continue to see modest weakness but have climbed off their worst levels. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.5 basis points at 2.243 percent.