News Column

Stocks Turn Higher After Moving To The Downside At The Open - US Commentary

June 16, 2014

WASHINGTON (Alliance News) - After moving to the downside at the open, stocks have shown a notable turnaround over the course of early trading on Monday. The major averages have bounced well off their lows for the young session and into positive territory.

Currently, the major averages are posting modest gains, near their best levels of the day. The Dow is up 15.35 points or 0.1% at 16,791.09, the Nasdaq is up 14.91 points or 0.4% at 4,325.56 and the S&P 500 is up 4.75 points or 0.3% at 1,940.91.

The initial weakness on Wall Street was partly due to continued concerns about the situation in Iraq amid reports that Sunni insurgents are making further progress toward Baghdad.

The Obama administration is reportedly considering opening talks with Iran to discuss ways to provide aid to the Iraqi government.

Selling pressure waned not long after the open, however, with a batch of upbeat US economic data helping to limit the downside.

The subsequent recovery reflects better than expected readings on New York manufacturing activity, industrial production, and homebuilder confidence.

Before the start of trading, the New York Federal Reserve said its general business conditions index inched up to 19.3 in June from 19.0 in May, with a positive reading indicating growth in regional manufacturing activity.

The modest uptick by the index came as a surprise to economists, who had been expecting the index to drop to a reading of 15.0.

The Federal Reserve released a separate report showing that industrial production increased by 0.6% in May following a revised 0.3% decrease in April. Economists had expected production to climb by about 0.5%.

Additionally, the National Association of Home Builders recently released a report showing that homebuilder confidence has improved by more than expected in the month of June.

Considerable strength has emerged among electronic storage stocks, as reflected by the 3.9% gain being posted by the NYSE Arca Disk Drive Index. SanDisk (SNDK) is leading the sector higher after agreeing to acquire Fusion-io (FIO) for about USD1.1 billion.

Utilities stocks are also seeing significant strength, with Williams (WMB) posting a standout gain after agreeing to pay nearly USD6 billion to expand its ownership of Access Midstream Partners (ACMP).

Most of the other major sectors are showing only modest moves as traders look ahead to the Fed's monetary policy announcement on Wednesday.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan'sNikkei 225 Index tumbled by 1.1%, while China's Shanghai Composite Index advanced by 0.7%.

The major European markets have also turned mixed on the day. While the German DAX Index has edged up by 0.1%, the French CAC 40 Index and the UK'sFTSE 100 Index are down by 0.3% and 0.1%, respectively.

In the bond market, treasuries are showing a lack of direction as traders weigh the upbeat economic data against the worries about Iraq. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.597%.

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Source: Alliance News

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