Stocks Moving Mostly Higher In Mid-Day Trading - U.S. Commentary

(RTTNews) - After recovering from an initial move to the downside, stocks have moved mostly higher over the course of the trading day on Tuesday. The major average have all turned positive, with the Nasdaq and the S&P 500 bouncing off their worst levels in almost a month.

Recently, the major averages have seen some further upside, reaching new highs for the session. The Dow is up 88.97 point or 0.5 percent at 17,120.11, the Nasdaq s up 16.79 points or 0.4 percent at 4,535.69 and the S&P 500 is up 12.62 points or 0.6 percent at 1,996.75.

The strength that has emerged on Wall Street may be partly due to the release of tame producer price inflation data before the start of trading.

The Labor Department said its producer price index was unchanged in August after inching up by 0.1 percent in July. The unchanged reading came in line with economist estimates.

Excluding decreases in food and energy prices, core producer prices ticked up by 0.1 percent in August after edging up by 0.2 percent in the previous month. The modest increase also matched estimates.

The report also showed that producer prices and core producer prices both increased by annual rates of 1.8 percent in August.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "Based on past form, these data are consistent with consumer price inflation of just below the Fed's 2% target."

The data may have eased some of the concerns about the outlook for interest rates ahead of the Federal Reserve's monetary policy announcement on Wednesday.

While the Fed is widely expected to announce a further reduction in the pace of its asset purchases, traders are likely to pay closer attention to any changes to the language regarding the outlook for rates.

Recent upbeat economic data has led to some concerns that the Fed will no longer say that it will be appropriate to maintain the current target range for rates for a "considerable time" after the asset purchase program ends.

Sector News

Despite the monetary policy uncertainty, interest rate-sensitive utilities stocks have shown a strong move to the upside on the day. Reflecting the strength in the sector, the Dow Jones Utilities Average has advanced by 1.4 percent.

PSEG (PEG) and American Electric Power (AEP) are turning in two of the utilities sector's best performances, climbing by 2.3 percent and 2.2 percent, respectively.

Considerable strength has also emerged among energy stocks, which are moving higher along with the price of crude oil. With crude for October delivery jumping $1.25 to $94.17 a barrel, the NYSE Arca Oil & Gas Index is up by 1.6 percent.

Semiconductor stocks are also regaining some ground following the weakness seen in the previous session, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index edged down by 0.2 percent, while Hong Kong's Hang Seng Index slumped by 0.9 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index and the U.K.'s FTSE 100 Index dipped by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries continue to see modest strength but have pulled back well off their best levels. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.585 percent.