Stocks Remain Firmly Positive In Mid-Day Trading - U.S. Commentary

(RTTNews) - After moving sharply higher earlier in the session, stocks continue to turn in a strong performance in mid-day trading on Friday. The upward move on the day has partly offset the sharp pullback seen over the two previous sessions.

In recent trading, the major averages have pulled back off their highs for the session, but they remain firmly positive. The Dow is up 225.42 points or 1.3 percent at 17,703.09, the Nasdaq is up 60.72 points or 1.2 percent at 5,098.24 and the S&P 500 is up 23.11 points or 1.1 percent at 2,072.73.

The strength on Wall Street partly reflects bargain hunting on the heels of the recent weakness, which came amid concerns about the outlook for monetary policy.

Traders have also reacted positively to a Labor Department report showing stronger than expected job growth in the month of November.

The report said non-farm payroll employment jumped by 211,000 jobs in November compared to economist estimates for an increase of about 190,000 jobs.

Job growth in September and October was also upwardly revised to 145,000 jobs and 298,000 jobs, respectively, reflecting 35,000 more jobs than previously reported.

The Labor Department also said the unemployment rate held at the more than seven-year low of 5.0 percent set in the previous month, matching expectations.

The stronger than expected job growth has further cemented expectations the Federal Reserve will raise interest rates later this month, although the pace of monetary policy normalization is expected to be gradual.

Joel L. Naroff, President and Chief Economist at Naroff Economic Advisors, said, "There really is nothing except a major crisis that will stop the Fed from its appointed first round of rate hikes."

"All it would have taken is a mediocre employment report to provide the necessary cover to raise rates and the November data were more than that," he added.

A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly widened in October, as exports fell at a faster rate than imports.

The Commerce Department said the trade deficit climbed to $43.9 billion in October from a revised $42.5 billion in September.

Economists had expected the trade deficit to narrow to $40.6 billion in October from the $40.8 billion originally reported for the previous month.

Sector News

While most of the major sectors have moved to the upside on the day, gold stocks are posting particularly strong gains. The NYSE Arca Gold Bugs Index has surged up by 4.7 percent to its best intraday level in a month.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, as gold for February delivery is jumping $25.40 to $1,086.60 an ounce.

Significant strength is also visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index both climbing by 1.5 percent.

Utilities stocks are also turning in a strong performance, resulting in a 1.1 percent gain by the Dow Jones Utilities Average. The average is bouncing off the nearly three-month closing low set in the previous session.

Commercial real estate, software, and airline stocks are also seeing considerable strength, while energy stocks have come under pressure amid a notable decrease by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific joined the global sell-off during trading on Friday. Japan's Nikkei 225 Index plunged by 2.2 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

The major European markets also saw some weakness on the day. While the U.K.'s FTSE 100 Index fell by 0.6 percent, the French CAC 40 Index and the German DAX Index both dipped by 0.3 percent.

In the bond market, treasuries are regaining ground following the sell-off seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.6 basis points at 2.284 percent.