U.S. Stocks Move Sharply Higher Following Recent Weakness

Stocks moved sharply higher over the course of the trading day on Wednesday, regaining ground following the notable downward move seen over the past several sessions. The major averages all showed strong moves to the upside, with the tech-heavy Nasdaq snapping a seven-session losing streak.

The major averages finished the session just off their best levels of the day. The Dow jumped 435.98 points or 1.4 percent to 31,581.28, the Nasdaq soared 246.99 points or 2.1 percent to 11,791.90 and the S&P 500 surged 71.68 points or 1.8 percent to 3,979.87.

The rally on Wall Street came as some traders looked to pick up stocks at reduced levels following the recent weakness, which dragged the major averages down to their lowest levels in over a month.

While other recent bargain hunting efforts have faltered over the course of the trading day, traders may now feel that interest rate concerns have been priced into the markets.

The rebound also came amid a pullback by treasury yields, with the yield on the benchmark ten-year note giving back ground after reaching a nearly three-month high on Tuesday.

Stocks saw further upside following the release of the Federal Reserve’s Beige Book, which said economic activity in the U.S. has been essentially unchanged since early July.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, noted five districts reported slight to modest growth in activity and five others reported slight to modest softening.

With regard to inflation, the Fed said prices remained highly elevated, with substantial price increases reported across all districts, particularly for food, rent, utilities, and hospitality services.

However, the report noted nine districts reported some degree of moderation in rate of price growth in recent months.

A separate report released by the Commerce Department showed the U.S. trade deficit narrowed significantly in the month of July.

The Commerce Department said the trade deficit shrank to $70.6 billion in July from a revised $80.9 billion in June.

Economists had expected the trade deficit to narrow to $70.3 billion from the $79.6 billion originally reported for the previous month.

Sector News

Airline stocks showed a substantial move back to the upside over the course of the session, with the NYSE Arca Airline Index soaring by 4.3 percent after ending the previous session at its lowest closing level in over a month.

Considerable strength was also visible among gold stocks, as reflected by the 3.8 percent surge by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid an increase by the price of the precious metal.

Utilities stocks also turned in a particularly strong performance, resulting in a 3.3 percent jump by the Dow Jones Utility Average.

Retail, chemical, and biotechnology stocks also saw notable strength on the day, while energy stocks bucked the uptrend amid a steep drop by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index declined by 0.7 percent, while Hong Kong’s Hang Seng Index slid by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index slumped by 0.9 percent, the French CAC 40 Index closed just above the unchanged line and the German DAX Index rose by 0.4 percent.

In the bond market, treasuries regained ground following the sell-off seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.5 basis points to 3.265 percent.

Looking Ahead

Remarks by Fed Chair Jerome Powell are likely to attract attention on Thursday along with the European Central Bank’s monetary policy decision and a report on weekly jobless claims.

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