WASHINGTON (dpa-AFX) - After moving sharply higher early in the session, stocks continue to see significant strength in afternoon trading on Wednesday. With the upward move, the Nasdaq and the S&P 500 have reached new record intraday highs.
Currently, the Nasdaq and S&P 500 are off their highs of the session but still firmly positive. The Nasdaq is up 297.88 points or 1.7 percent at 17,641.42 and the S&P 500 is up 55.21 points or 1.0 percent at 5,430.53.
The narrower Dow, on the other hand, has pulled back well off its early highs and is currently up just 31.99 points or 0.1 percent at 38,779.41.
The early rally on Wall Street came following the release of a Labor Department report showing U.S. consumer prices were unexpectedly flat in the month of May.
The Labor Department said its consumer price index came in unchanged in May after rising by 0.3 percent in April. Economists had expected consumer prices to inch up by 0.1 percent.
The unchanged reading came as a 3.5 percent nosedive by gasoline prices helped offset a continued increase in prices for shelter.
Excluding food and energy prices, core consumer prices rose by 0.2 percent in May after climbing by 0.3 percent in April. Core prices were expected to increase by another 0.3 percent.
The report also said the annual rate of consumer price growth slowed to 3.3 percent in May from 3.4 percent in April. Economists had expected the pace of growth to remain unchanged.
The annual rate of core consumer price growth also slowed to 3.4 percent in May from 3.6 percent in April. The pace of growth was expected to dip to 3.5 percent.
The slower than expected annual growth rates led to renewed optimism about the outlook for interest rates ahead of this afternoon's monetary policy announcement by the Federal Reserve.
Quincy Krosby, Chief Global Strategist for LPL Financial, said the data should help the Fed offer a 'more positive view regarding monetary easing despite invoking their well-practiced reminder that they remain data dependent and require additional confirmation that inflation continues to trend lower.'
'Since data releases are assessed through the lens of the Fed and the probability for rate cuts, the CPI report should help underscore that the Fed is nearing ever closer to its initiation of the rate easing cycle,' she added.
While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement as well as officials' latest projections for the economy and interest rates.
Sector News
Interest rate-sensitive housing stocks continue to see substantial strength on the day, resulting in a 3.9 percent spike by the Philadelphia Housing Sector Index.
Considerable strength also remains visible among semiconductor stocks, as reflected by the 3.1 percent surge by the Philadelphia Semiconductor Index.
Banking stocks have also moved sharply higher over the course of the session, driving the KBW Bank Index up by 2.2 percent. The index is bouncing off its lowest closing level in almost two months.
Computer hardware, airline and software stocks are also seeing considerable strength, while oil producer stocks are among the few groups bucking the uptrend.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.7 percent, while China's Shanghai Composite Index rose by 0.3 percent.
Meanwhile, the major European markets all moved notably higher on the day. While the German DAX Index shot up by 1.4 percent, the French CAC 40 Index jumped by 1.0 percent and the U.K.'s FTSE 100 Index advanced by 0.8 percent.
In the bond market, treasuries have surged in reaction to the consumer price inflation data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 13.5 basis points at 4.267 percent.
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