Stocks Holding On To Strong Gains After Early Rally - U.S. Commentary

(RTTNews) - After moving sharply higher early in the session, stocks remain mostly positive in mid-day trading on Tuesday. With the gains on the day, the major averages continued to recover from the sell-off that was seen last week.

Currently, the major averages are off their highs for the session but still firmly positive. The Dow is up 189.48 points or 1.1 percent at 17,557.98, the Nasdaq is up 47.07 points or 1 percent at 4,999.30 and the S&P 500 is up 22.52 points or 1.1 percent at 2,044.46.

The strength on Wall Street partly reflects a positive reaction to a rally by European stocks, which moved higher for the first time in six days.

An increase by the price of crude oil has also generated buying interest, with crude for January delivery climbing $0.78 to $37.09 a barrel.

The price of crude oil is moving higher for the second consecutive session, rebounding further off the nearly seven year closing low set last Friday.

Meanwhile, traders are also looking ahead to the Federal Reserve's monetary policy announcement scheduled for tomorrow afternoon.

The Fed is widely expected to raise interest rates, but traders are likely to pay close attention to the wording of the accompanying statement to gain clues about the outlook for policy.

On the economic front, the Labor Department released a report before the start of trading showing that consumer prices were flat in the month of November.

The Labor Department said its consumer price index was unchanged in November after rising by 0.2 percent in October. The flat reading matched economist estimates.

Excluding food and energy prices, the core consumer price index rose by 0.2 percent in November, matching the increases seen in the two previous months as well as expectations.

The National Association of Home Builders also released a report showing an unexpected deterioration in homebuilder confidence in the month of December.

The report said the NAHB/Wells Fargo Housing Market Index edged down to 61 in December from 62 in November. The drop surprised economists, who had expected the index to inch up to 63.

A separate report from the New York Federal Reserve showed that regional manufacturing activity contracted for the fifth straight month in December, although the pace of decline slowed more than expected.

Sector News

Oil service stocks are seeing substantial strength in mid-day trading, benefiting from the increase by the price of crude oil. Reflecting the strength in the sector, the Philadelphia Oil Service Index has surged up by 2.8 percent.

Transocean (RIG), Nabors Industries (NBR), and Helmerich & Payne (HP) are turning in some of the oil service sector's best performances on the day.

Banking stocks have also shown a strong move to the upside, resulting in a 2.6 percent gain by the Dow Jones Banks Index. Comerica (CMA) and Regions Financial (RF) are posting standout gains.

Considerable strength also remains visible among biotechnology stocks, as reflected by the 2.5 percent gain being posted by the NYSE Arca Biotechnology Index. The index is rebounding after ending the previous session at its lowest closing level in well over a month.

Telecom, electronic storage, and brokerage stocks are also turning in strong performances, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1.7 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets moved sharply higher on the day. While the U.K.'s FTSE 100 Index surged up by 2.5 percent, the German DAX Index and the French CAC 40 Index soared by 3.1 percent and 3.2 percent, respectively.

In the bond market, treasuries have climbed off their worst levels but continue to see moderate weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.2 basis points at 2.257 percent.