News Column

Strong Economic Data Pushes Stocks Mostly Higher - US Commentary

June 24, 2014

WASHINGTON (Alliance News) - After initially showing a lack of direction, stocks have moved mostly higher over the course of early trading on Tuesday. The major averages have all moved to the upside, although buying interest has remained subdued.

While the Nasdaq has climbed firmly into positive territory, the Dow and the S&P 500 are posting only modest gains. The Nasdaq is up 24.98 points or 0.6% at 4,393.66, while the Dow is up 24.94 points or 0.2% at 16,962.20 and the S&P 500 is up 3.94 points or 0.2% at 1,966.55.

The strength that has emerged on Wall Street comes on the heels of the release of much better than expected US economic data, including a Commerce Department report showing that new home sales jumped to a six-year high in May.

The report said new home sales soared 18.6% to a seasonally adjusted annual rate of 504,000 in May after rising 3.7% to a revised rate of 425,000 in April. Economists had expected sales to climb to a rate of 440,000.

With the much bigger than expected increase, new home sales reached their highest level since hitting a matching rate in May of 2008.

Additionally, the Conference Board released a report showing that its reading on consumer confidence rose by much more than expected in the month of June.

The Conference Board said its consumer confidence index jumped to 85.2 in June from a revised 82.2 in May, reaching its highest level since January of 2008.

Economists had expected the consumer confidence index to edge up to 83.5 from the 83.0 originally reported for the previous month.

Housing stocks are seeing some strength on the heels of the new home sales data, moving higher along with internet, healthcare, and airline stocks.

Most of the other major sectors are showing only modest moves, however, with lingering valuation concerns limiting the upside.

Among individual stocks, shares of Vertex Pharmaceuticals (VRTX) have surged up by 42.6% after the company reported successful trials of its cystic fibrosis treatment.

Chip maker Micron Technology (MU) has also moved to the upside after reporting third quarter earnings and revenues that came in above analyst estimates.

On the other hand, shares of Walgreen (WAG) have come under pressure after the drug store operator reported weaker than expected third quarter results.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan'sNikkei 225 Index inched up by 0.1%, while Hong Kong'sHang Seng Index rose by 0.3%.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the UK'sFTSE 100 Index is down by 0.2%, the German DAX Index and the French CAC 40 Index are both up by 0.1%.

In the bond market, treasuries have pulled back well off their early highs following the upbeat data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.615%.

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Source: Alliance News

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