Stocks Continue To Benefit From Recent Upward Momentum – U.S. Commentary
Following the notable advance seen over the course of the previous session, stocks are seeing some further upside in morning trading on Tuesday. With the upward move, the major averages have reached their best intraday levels in two months.
Currently, the major averages are hovering firmly in positive territory. The Dow is up 130.39 points or 0.5 percent at 25,369.76, the Nasdaq is up 51.88 points or 0.7 percent at 7,399.41 and the S&P 500 is up 9.59 points or 0.4 percent at 2,734.46.
Stocks continue to benefit from recent upward momentum, which has helped the markets recover from the sell-off seen in the weeks leading up to Christmas.
Optimism about U.S.-China trade talks has contributed to recent buying interest along with indications the prolonged government shutdown did not have a significant impact on the U.S. economy.
Traders are also reacting to fourth quarter results from Google parent Alphabet (GOOGL), which exceeded analyst estimates on both the top and bottom lines.
However, shares of Alphabet have moved lower amid concerns about a sharp increase in capital spending by the tech giant as well as a drop in advertising prices.
Traders have largely shrugged off a report from the Institute for Supply Management showing activity in the U.S. service sector grew at a slower rate in the month of January.
The ISM said its non-manufacturing index fell to 56.7 in January from an upwardly revised 58.0 in December, although a reading above 50 still indicates growth in the service sector.
Economists had expected the non-manufacturing index to dip to 57.1 from the 57.6 originally reported for the previous month.
With the bigger than expected decrease, the index dropped to its lowest level since a matching reading in July of last year.
“Respondents are concerned about the impacts of the government shutdown but remain mostly optimistic about overall business conditions,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
Tobacco stocks have shown a significant move to the upside in morning trading, resulting in a 1.3 percent advance by the NYSE Arca Tobacco Index. The index has reached its best intraday level in well over two months.
Retail and chemical stocks are also seeing some strength on the day, although most of the major sectors are showing only modest moves.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday, with several markets closed for Lunar New Year holidays. Japan’s Nikkei 225 Index slipped by 0.2 percent, while Australia’s S&P/ASX 200 Index spiked by 2 percent.
Meanwhile, the major European markets have moved significantly higher on the day. While the U.K.’s FTSE 100 Index has jumped by 1.8 percent, the French CAC 40 Index and the German DAX Index are both up by 1.5 percent.
In the bond market, treasuries are rebounding following the pullback seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.4 basis points at 2.700 percent.
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