Bargain Hunting Contributes To Rally On Wall Street - U.S. Commentary

(RTTNews) - After ending the previous session roughly flat, stocks moved sharply higher over the course of the trading day on Wednesday. The gains on the day partly offset the pullback seen over the past several sessions.

The major averages moved roughly sideways throughout much of the afternoon, holding on to strong gains. The Dow skyrocketed 236.36 points or 1.3 percent to 18,000.40, the Nasdaq jumped 62.82 points or 13 percent to 5,076.69 and the S&P 500 surged up 25.05 points or 1.2 percent to 2,105.20.

The rally on Wall Street was partly due to bargain hunting, with traders picking up stocks at somewhat reduced levels following recent weakness.

The Dow ended Tuesday's trading only slightly below the unchanged line, but it still closed lower for the fourth consecutive session and hit its lowest closing level in two months.

Buying interest was also generated by strength in the European markets, which also rebounded following recent weakness amid upbeat news out of Greece.

Traders reacted positively to a report from Bloomberg News indicating that the German government may be satisfied with Greece committing to at least one economic reform sought by creditors to open the door to bailout funds.

Citing people familiar with Germany's position, Bloomberg said the Germans still insist on a package of steps but may settle for a clear commitment by the Greek government to a measure up front to unlock aid.

German Chancellor Angela Merkel and French President Francois Hollande are due to meet with Greek Prime Minister Alexis Tsipras tonight on the sidelines of a European Union summit in Brussels.

Among individual stocks, shares of HCC Insurance (HCC) moved sharply higher on the day after the company announced an agreement to be acquired by Tokio Marine in a $7.5 billion all cash deal.

Chip maker Sigma Designs (SIGM) also posted a strong gain after reporting first quarter results that came in above analyst estimates.

On the other hand, shares of Mattress Firm (MFRM) came under pressure after the mattress retailer reported weaker than expected first quarter results.

Sector News

Most of the major sectors moved notably higher on the day, reflecting broad based buying interest on Wall Street.

Tobacco stocks posted some particularly strong gains, driving the NYSE Arca Tobacco Index up by 3.5 percent. With the gain, the index reached a new record closing high.

Alliance One (AOI) helped to lead the tobacco sector higher, jumping 14 percent to its best closing level in ten months.

Considerable strength was also visible among oil service stocks, as reflected by the 2.4 percent gain posted by the Philadelphia Oil Service Index. The strength in the sector came as crude oil for July delivery jumped $1.29 to $61.43 a barrel.

Software stocks also saw significant strength on the day, driving the Dow Jones Software Index up by 2 percent. The gain by the index came after it ended the previous session at its worst closing level in well over a month.

Steel, housing, networking and banking stocks also moved notably higher over the course of the trading session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index edged down by 0.3 percent, while Australia's All Ordinaries Index crept up by 0.1 percent.

Meanwhile, the major European markets all moved notably higher the day. While the German DAX Index soared by 2.4 percent, the French CAC 40 Index surged up by 1.8 percent and the U.K.'s FTSE 100 Index jumped by 1.1 percent.

In the bond market, treasuries showed another notable move to the downside, extending their recent sell-off. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced by 6.1 basis points to 2.478 percent.

Looking Ahead

U.S. economic data is likely to move back into the spotlight on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, retail sales, and import and export prices.