News Column

Stocks Remain Mostly Positive After Early Upward Move - US Commentary

July 22, 2014

WASHINGTON (Alliance News) - After ending the previous session modestly lower, stocks have shown a strong move back to the upside during trading on Tuesday. With the upward move on the day, the S&P 500 has reached a new record intraday high.

The major averages have moved roughly sideways in recent trading, hovering in positive territory. The Dow is up 67.79 points or 0.4% at 17,119.52, the Nasdaq is up 36.74 points or 0.8% at 4,461.45 and the S&P 500 is up 11.27 points or 0.6% at 1,984.90.

The strength on Wall Street partly reflects a positive reaction to the day's economic data, including a report from the National Association of Realtors showing that existing home sales rose by more than expected in June.

NAR said existing home sales climbed 2.6% to a seasonally adjusted annual rate of 5.04 million in June from an upwardly revised 4.91 million in May. Economists had been expecting existing home sales to rise to 4.99 million.

With the bigger than expected increase, existing home sales rose to their highest annual rate since reaching 5.13 million in October of 2013.

Relatively tame inflation data has also generated some buying interest, as the Labor Department said its consumer price index rose by 0.3% in June after climbing by 0.4% in May. The increase by the index matched the consensus estimate.

Excluding food and energy prices, core consumer prices inched up by 0.1% in June after rising by 0.3% in the previous month. Economists had expected core prices to edge up by 0.2%.

Core prices increased at an annual rate of 1.9% in June, reflecting a slowdown from the 2.0% growth reported in May.

A largely positive reaction to the latest batch of earnings news is also contributing to the strength on Wall Street, with Comcast (CMCSA) and Lexmark (LXK) posting notable gains after reporting better than expected quarterly results.

Not all companies have reacted positively to their quarterly results, however, as Dow components Travelers (TRV), Coca-Cola (KO), United Technologies (UTX), and McDonald's (MCD) have all moved to the downside.

Sector News

Networking stocks have shown a particularly strong move to the upside on the day, driving the NYSE Arca Networking Index up by 1.7%. The index has bounced well off the two-month closing low that it set last Thursday.

Ciena (CIEN), Arris Group (ARRS), and Juniper Networks (JNPR) are turning in some of the networking sector's best performance.

Significant strength has also emerged among telecom stocks, as reflected by the 1.6% gain being posted by the NYSE Arca Telecom Index. With the gain, the index has reached its best intraday level in well over a month.

Housing stocks are also turning in a strong performance on the heels of the upbeat existing home sales data, with the Philadelphia Housing Sector Index climbing by 1.2%.

Computer hardware, transportation, and biotechnology stocks are also seeing notable strength, while gold stocks are among the few groups bucking the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan'sNikkei 225 Index advanced by 0.8%, while Hong Kong'sHang Seng Index surged up by 1.7%.

The major European markets also moved notably higher on the day. While the UK'sFTSE 100 Index jumped by 1%, the German DAX Index and the French CAC 40 Index soared by 1.3% and 1.5%, respectively.

In the bond market, treasuries are seeing modest weakness after ending the previous session slightly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.3 basis points at 2.487%.

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Source: Alliance News

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