Stocks Move Sharply Higher, Nasdaq Sets Record Intraday High - U.S. Commentary

(RTTNews) - Extending the upward move seen over the course of the two previous sessions, stocks have moved sharply higher during trading on Thursday. With the gains on the day, the tech-heavy Nasdaq has reached a new record intraday high.

The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is up 196.82 points or 1.1 percent at 18,132.56, the Nasdaq is up 69.43 points or 1.4 percent at 5,134.22 and the S&P 500 is up 20.70 points or 1 percent at 2,121.14.

The rally on Wall Street comes as traders continue to react positive to the Federal Reserve's monetary policy announcement on Wednesday.

While the Fed did not provide any specific guidance regarding its first interest rate hike, the central bank's forecasts reinforced the view that the eventual increase in rates will be gradual.

Tame consumer price inflation data also generated some optimism about the outlook for rates in light of the Fed's insistence that it will be data dependent.

The Labor Department released a report before the start of trading showing that consumer prices rose by slightly less than expected in the month of May.

The Labor Department said its consumer price index climbed by 0.4 percent in May after inching up by 0.1 percent in April. Economists had expected a slightly bigger 0.5 percent increase.

Excluding food and energy prices, the core consumer price index edged up by 0.1 percent in May after rising by 0.3 percent in the previous month. Core prices had been expected to rise by 0.2 percent.

While the headline index was unchanged compared to a year ago, the annual rate of growth in core consumer prices slowed to 1.7 percent in May from 1.8 percent in April.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The latter underlines why the Fed is in no hurry to raise interest rates."

The Labor Department released a separate report showing a bigger than expected drop in weekly jobless claims, while the Philadelphia Fed said its index of regional manufacturing activity jumped to a six-month high in June.

Sector News

Biotechnology stocks are posting particularly strong gains on the day, driving the NYSE Arca Biotechnology Index up by 3.1 percent. With the gain, the index has reached its best intraday level in almost three months.

BioMarin (BMRN) has helped to lead the biotech sector higher, jumping by 12.7 percent after reporting positive results from a study of its treatment for dwarfism.

Significant strength has also emerged among transportation stocks, as reflected by the 1.6 percent gain being posted by the Dow Jones Transportation Average. Alaska Air (ALK), Avis Budget Group (CAR), and Ryder (R) are posting notable gains.

Most of the other major sectors have also moved notably higher on the day, with considerable strength visible among health care, semiconductor, and retail stocks.

However, oil service stocks continue to buck the uptrend, resulting in a 1.5 percent drop by the Philadelphia Oil Service Index. The weakness in the sector comes despite an increase by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.1 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets moved higher over the course of the session. While the German DAX Index surged up by 1.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.4 percent and 0.3 percent, respectively.

In the bond market, treasuries are giving back ground after trending higher over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.5 basis points at 2.351 percent.