U.S. Stocks See Further Upside After Early Rebound

Stocks have moved sharply higher over the course of the trading day on Wednesday, extending the advance seen early in the session. The major averages have all shown strong moves to the upside, regaining ground following recent weakness.

Currently, the major averages are hovering near their best levels of the day. The Dow is up 279.85 points or 0.9 percent at 31,425.15, the Nasdaq is up 139.62 points or 1.2 percent at 11,684.53 and the S&P 500 is up 43.34 points or 1.1 percent at 3,951.53.

The rally on Wall Street comes as some traders look to pick up stocks at reduced levels following the recent weakness, which has 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 comes 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.

Shortly, trading may be impacted by reaction to the Federal Reserve’s Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

The report, which comes two weeks ahead of the Fed’s next monetary policy decision, may shed additional light on the outlook for interest rates.

Meanwhile, a report released by the Commerce Department this morning 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

Gold stocks continue to see substantial strength in afternoon trading, resulting in a 3.8 percent spike by the NYSE Arca Gold Bugs Index.

The rally by gold stocks comes amid an increase by the price of the precious metal, with gold for December delivery climbing $13.30 to $1,726.20 an ounce.

Significant strength also remains visible among utilities stocks, as reflected by the 2.9 percent jump by the Dow Jones Utility Average.

Airline stocks are also turning in strong performance on the day, driving the NYSE Arca Airline Index up by 2.5 percent. The index is bouncing off its lowest closing level in well over a month.

Retail, chemical, and biotechnology stocks are also seeing notable strength, while energy stocks have 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 are regaining 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, is down by 7.1 basis points at 3.269 percent.

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