Modest Strength Remains Visible On Wall Street - U.S. Commentary

(RTTNews) - While buying interest has remained somewhat subdued, stocks continue to see modest strength in mid-day trading on Wednesday. The Dow has pulled back off its new record intraday high but remains in positive territory.

Currently, the major averages are clinging to slim gains. The Dow is up 19.23 points or 0.1 percent at 17,151.20, the Nasdaq is up 7.56 points or 0.2 percent at 4,560.32 and the S&P 500 is up 1.41 points or 0.1 percent at 2,000.39.

The modest strength on Wall Street comes as another tame inflation report has further offset recent concerns about the outlook for interest rates.

Before the start of trading, the Labor Department released a report that unexpectedly showed a modest drop in consumer prices in the month of August.

The Labor Department said its consumer price index dipped by 0.2 percent in August, reflecting the first drop in consumer prices since April of 2013.

The report also said the annual rate of consumer price growth slowed to 1.7 percent in August compared to the Federal Reserve's 2 percent target.

The data added has added to optimism that the Fed will reiterates its pledge to keep interest rates low for a "considerable time" in its monetary policy statement this afternoon.

The rally seen in the previous session was partly in reaction to a preview of the statement by Jon Hilsenrath, the Wall Street Journal's chief economics correspondent.

In a webcast, Hilsenrath said the central bank will continue to use the words "considerable time" to describe when interest rates will begin to rise but suggested that the wording will be qualified.

Hilsenrath, who is known to speak with many Fed officials, also said the Fed is likely to keep the "significant underutilization" of labor market resources comment in its statement.

The Fed is due to release its policy statement as well as its updated economic projections at about 2 pm ET, followed by Fed Chair Janet Yellen's press conference at 2:30 pm ET.

While the central bank is widely expected to announce a further reduction in the pace of its asset purchases, traders are likely to focus on any changes to the language of the statement.

Sector News

After moving sharply higher in early trading, housing stocks continue to see significant strength on the day. The Philadelphia Housing Sector Index has pulled back off its highs for the session but continues to post a 1.8 percent gain.

Homebuilder Lennar (LEN) is turning in one of the sector's best performances after reporting better than expected third quarter results.

The strength among housing stocks also comes following the release of a report from the National Association of Home Builders showing that homebuilder confidence jumped to a nearly nine-year high in September.

Considerable strength also remains visible among railroad stocks, as reflected by the 1.3 percent gain being posted by the Dow Jones Railroads Index. With the gain, the index has reached a new record high.

Steel stocks are also seeing notable strength on the day, with U.S. Steel (X) leading the sector higher after saying it expects its second quarter adjusted earnings to be significantly above the consensus estimate.

Most of the other major sectors are showing more modest moves amid uncertainty ahead of the Fed's monetary policy announcement.

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 0.1 percent, while Hong Kong's Hang Seng Index jumped by 1 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index slipped by 0.2 percent, the German DAX Index and the French CAC 40 Index rose by 0.3 percent and 0.5 percent, respectively.

In the bond market, treasuries are seeing modest strength ahead of the highly anticipated announcement from the Fed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 2.574 percent.