Easing Interest Rate Worries Lead To Rally On Wall Street - U.S. Commentary

(RTTNews) - After moving moderately higher in early trading, stocks have seen some further upside over the course of the trading day on Wednesday. The strong upward move on the day has more than offset the weakness seen in the previous session.

The major averages have recently pulled back off their best levels of the day but remain firmly positive. The Dow is up 92.86 points or 0.6 percent at 16,653.40, the Nasdaq is up 38.99 points or 0.9 percent at 4,428.24 and the S&P 500 is up 12.50 points or 0.7 percent at 1,946.25.

The strength on Wall Street partly reflects a positive reaction to a report from the Commerce Department showing that U.S. retail sales unexpectedly came in unchanged in the month of July.

The Commerce Department said retail sales were virtually unchanged in July after edging up by 0.2 percent in June. Economists had been expecting another 0.2 percent increase.

Core retail sales, which exclude autos, gasoline, and building materials, inched up by just 0.1 percent in July following a downwardly revised 0.5 percent increase in June.

While the data suggests that spending in the third quarter got off to a slow start, the report also seems to have offset some of the recent concerns about the outlook for interest rates.

Allan von Mehren, Chief Analyst at Danske Bank, said, "After some swings in retail sales related to the weak winter sales and rebound in Q2, sales are reverting to the trend seen over the past years."

"The deceleration in growth also suggests that we should expect a moderation in ISM indices for both manufacturing and non-manufacturing over the coming 3-4 months," he added. "This may ease the pressure a little bit on the Fed."

The markets have also benefited from easing geopolitical concerns despite the ongoing conflicts in Ukraine and Iraq.

However, it is worth noting that the extent of the buying interest is likely being exaggerated by below average trading volume.

Sector News

Internet stocks are turning in some of the market's best performances in mid-day trading, resulting in a 1.3 percent advance by the NYSE Arca Internet Index. The gain has lifted the index to its best intraday level in over a month.

Amazon (AMZN) has helped to lead the internet sector higher, with the online retailer surging up by 3.3 percent due in part to news of a jump in same-store sales in July.

Significant strength has also emerged among commercial real estate stocks, as reflected by the 1.3 percent gain being posted by the Morgan Stanley REIT Index. First Industrial Realty Trust (FR) and Ventas (VTR) are posting notable gains.

Biotechnology stocks are also seeing considerable strength on the day, driving the NYSE Arca Biotechnology Index up by 1.2 percent. The index is on pace for its best close in over a month.

Healthcare, airline, and defense stocks are also seeing notable strength, moving higher along with most of the other major sectors.

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 rose by 0.4 percent, while Australia's All Ordinaries Index dipped by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1.4 percent, the French CAC 40 Index advanced by 0.8 percent and the U.K.'s FTSE 100 Index rose by 0.4 percent.

In the bond market, treasuries have moved modestly higher amid the easing interest rate concerns. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.6 basis points at 2.426 percent.