Stocks Seeing Modest Strength In Morning Trading - U.S. Commentary

(RTTNews) - Stocks have moved modestly higher in morning trading on Thursday, adding to the slim gains posted in the previous session. Buying interest has remained relatively subdued, however, limiting the upside for the markets.

Currently, the major averages are clinging to modest gains. The Dow is up 7.22 points or less than a tenth of a percent at 18,581.16, the Nasdaq is up 9.77 points or 0.2 percent at 5,238.43 and the S&P 500 is up 1.71 points or 0.1 percent at 2,183.93.

The strength on Wall Street may partly reflect a positive reaction to earnings news from Wal-Mart (WMT), with the retail giant climbing by 1.9 percent on the day.

Before the start of trading, Wal-Mart reported better than expected second quarter results and raised its full-year guidance.

Networking giant Cisco Systems (CSCO) also reported fourth quarter results that topped analyst estimates and announced plans to cut up to 5,500 jobs or 7 percent of its workforce.

Nonetheless, traders seem somewhat reluctant to make significant moves as they continue to digest the minutes of the Federal Reserve's latest meeting, which suggested that officials were mixed about the outlook for monetary policy.

The minutes from the July meeting revealed that Fed officials generally agreed that it was prudent to accumulate more economic data before removing monetary accommodation.

However, the Fed said "some" members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.

Most economists still expect the Fed to leave interest rates unchanged at its next meeting in the latter part of September.

On the U.S. economic front, the Labor Department released a report this morning showing a modest decrease in initial jobless claims in the week ended August 13th.

The report said initial jobless claims edged down to 262,000, a decrease of 4,000 from the previous week's unrevised level of 266,000. Economists had expected jobless claims to dip to 265,000.

A separate report from the Philadelphia Federal Reserve showed tenuous growth in regional manufacturing activity in the month of August.

The Philly Fed said its diffusion index for current general activity climbed to a positive 2.0 in August from a negative 2.9 in July, with a positive reading indicating growth in regional manufacturing activity. The increase by the index matched economist estimates.

Additionally, the Conference Board released a report showing that its leading economic index rose by 0.4 percent in July following a 0.3 percent increase in June. Economists had expected the index to rise by another 0.3 percent.

Considerable strength is visible among electronic storage stocks, as reflected by the 2.4 percent gain being posted by the NYSE Arca Disk Drive Index. NetApp (NTAP) is leading the sector higher after reporting better than expected first quarter earnings.

Natural gas, oil service, and railroad stocks are also seeing significant strength on the day, while most of the other major sectors are showing more modest moves.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index slumped by 1.6 percent, while Hong Kong's Hang Seng Index advanced by 1 percent.

Meanwhile, the major European markets are all seeing modest strength on the day. While the German DAX Index has risen by 0.4 percent, the French CAC 40 Index is up by 0.2 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In the bond market, treasuries are showing a lack of direction after ending the previous session modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.558 percent.