Stocks Move Sharply Higher In Morning Trading - U.S. Commentary

(RTTNews) - Stocks have moved sharply higher in morning trading on Tuesday, adding to the gains posted in the previous session. The major averages have climbed firmly into positive territory, further offsetting the steep losses posted last week.

In recent trading, the major averages have moved roughly sideways, holding on to strong gains. The Dow is up 183.06 points or 1.1 percent at 17,551.56, the Nasdaq is up 56.78 points or 1.2 percent at 5,009.01 and the S&P 500 is up 22.06 points or 1.1 percent at 2,044.00.

The strength on Wall Street partly reflects a positive reaction to a rally by European stocks, which are moving 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 $0.65 to $36.96 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.

Biotechnology stocks have shown a substantial move to the upside, resulting in a 2.5 percent jump by the NYSE Arca Biotechnology Index. The index is regaining ground after ending the previous session at its lowest closing level in well over a month.

Financial, energy, and semiconductor stocks are also seeing considerable strength, moving higher along with most of the other major sectors.

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 have moved sharply higher on the day. While the U.K.'s FTSE 100 Index has surged up by 2.7 percent, the German DAX Index and the French CAC 40 Index are up by 3.2 percent and 3.4 percent, respectively.

In the bond market, treasuries have come under pressure, extending the sharp pullback seen on Monday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.8 basis points at 2.273 percent.