Stocks Extend Recovery From Post-Brexit Sell-Off - U.S. Commentary

(RTTNews) - Following the rebound seen in the previous session, stocks showed another substantial move to the upside during trading on Wednesday. With the gains on the day, the major averages further offset the sell-off seen following the Brexit vote.

The major averages finished the day firmly in positive territory, near their best levels of the session. The Dow surged up 284.96 points or 1.6 percent to 17,694.68, the Nasdaq spiked 87.38 points or 1.9 percent to 4,779.25 and the S&P 500 jumped 34.68 points or 1.7 percent to 2,070.77.

The strength on Wall Street came as the global markets continued to recover from the sell-off inspired by the British vote to leave the European Union.

Easing concerns about the impact of the so-called Brexit led traders to go bargain hunting following the steep losses posted on Friday and Monday.

With regard to the Brexit, European leaders are meeting in Brussels to discuss the way forward after the unexpected vote.

EU leaders continue to urge Britain to act quickly on the vote while also expressing hope that the U.K. will remain a close partner.

On the U.S. economic front, the Commerce Department released a report this morning showing that personal income rose by slightly less than expected in May.

The report said personal income edged up by 0.2 percent in May after rising by an upwardly revised 0.5 percent in April. Economists had expected income to rise by 0.3 percent.

Meanwhile, the Commerce Department also said personal spending climbed by 0.4 percent in May after spiking by an upwardly revised 1.1 percent in April. The increase matched economist estimates.

A separate report from the National Association of Realtors showed a bigger than expected pullback in pending home sales in the month of May.

NAR said its pending home sales index slid 3.7 percent to 110.8 in May from a downwardly revised 115.0 in April. Economists had expected the index to drop by 1.0 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Sector News

Extending the volatile performance seen over the past several sessions, electronic storage stocks showed a sharp move to the upside on the day. Reflecting the strength in the storage sector, the NYSE Arca Disk Drive Index surged up by 3.7 percent.

Nimble Storage (NMBL), Seagate Technology (STX), and NetApp (NTAP) turned in some of the sector's best performances.

Gold stocks also saw considerable strength on the day, resulting in a 2.7 percent jump by the NYSE Arca Gold Bugs Index. With the gain, the index reached its best closing level in almost two years.

The strength among gold stocks came amid an increase by the price of the precious metal, with gold for August delivery climbing $9 to $1,326.90 an ounce.

Significant strength was also visible among energy stocks, which moved higher along with the price of crude oil. Crude oil for August delivery surged up $2.03 to $49.88 a barrel.

Banking, software, housing, and airline stocks also moved notably higher, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Wednesday. Japan's Nikkei 225 Index spiked by 1.6 percent, while Hong Kong's Hang Seng Index shot up by 1.3 percent.

The major European markets also moved notably higher on the day. While the German DAX Index jumped by 1.8 percent, the French CAC 40 Index surged up by 2.6 percent and the U.K.'s FTSE 100 Index soared by 3.6 percent.

In the bond market, treasuries closed modestly lower after turning in another lackluster performance. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 1.477 percent.

Looking Ahead

While any Brexit news could impact trading on Thursday, traders are also likely to keep an eye on reports on weekly jobless claims and Chicago-area business activity.