News Column

Bargain Hunting Contributes To Early Strength On Wall Street - US Commentary

August 4, 2014

WASHINGTON (Alliance News) - Stocks have moved mostly higher in early trading on Monday, regaining some ground following the sell-off seen late last week. The major averages have all moved to the upside, although buying interest has remained somewhat subdued.

Currently, the major averages are posting modest gains, near their highs for the young session. The Dow is up 13.65 points or 0.1% at 16,507.02, the Nasdaq is up 18.61 points or 0.4% at 4,371.24 and the S&P 500 is up 3.53 points or 0.2% at 1,928.68.

The early strength on Wall Street is partly due to bargain hunting, with the Dow and the S&P 500 rebounding after ending last Friday's trading at two-month closing lows.

Buying interest has also been generated by news that Portugal's central bank announced a plan to rescue troubled lender Banco Espirito Santo to protect taxpayers and senior creditors.

In a 4.9 billion euro bailout that will leave junior bondholders with losses, the lender will be split into a "good bank" with healthy assets and a "bad bank" with riskier assets.

Nonetheless, trading activity may be somewhat subdued on the day amid the absence of any major US economic data.

Following the slew of economic data that was released last week, the economic calendar for the unfolding week is relatively quiet.

Later in the week, trading may be impacted by the release of reports on service sector activity, international trade, and labor productivity and costs.

A majority of the major sectors have moved to the upside on the day, although most are showing only modest strength in early trading.

Biotechnology stocks are turning in a strong performance, however, with the NYSE Arca Biotechnology Index climbing by 1.2%.

Computer hardware, internet, and housing stocks are also seeing early strength, while utilities stocks have come under considerable selling pressure.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan'sNikkei 225 Index dipped by 0.3%, while Hong Kong'sHang Seng Index rose by 0.3%.

The major European markets have also turned mixed on the day. While the German DAX Index has edged down by 0.1%, the UK'sFTSE 100 Index is up by 0.3% and the French CAC 40 Index is up by 0.7%.

In the bond market, treasuries have moved moderately higher, extending last Friday's strong upward move. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.7 basis points at 2.478%.

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Source: Alliance News

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