Stocks Mostly Positive Ahead Of Fed Announcement - U.S. Commentary

(RTTNews) - After showing some trepidation early in the session, stocks have moved mostly higher over the course of the trading day on Wednesday. The major averages have climbed more firmly into positive territory, with the S&P 500 reaching a new record intraday high.

In recent trading, the major averages have pulled back off their best levels but remain positive. The Dow is up 70.21 points or 0.3 percent at 26,663.12, the Nasdaq is up 43.24 points or 0.5 percent at 8,138.63 and the S&P 500 is up 5.52 points or 0.2 percent at 2,951.35.

The strength on Wall Street partly reflects a positive reaction to earnings news from Apple (AAPL), with the tech giant jumping by more than 7 percent.

The rally by Apple comes after the company reported fiscal second quarter results that beat analyst estimates on both the top and bottom lines and provided upbeat guidance.

Positive sentiment was also generated in reaction to a report from payroll processor ADP showing much stronger than expected private sector job growth in the month of April.

ADP said private sector employment surged up by 275,000 jobs in April after climbing by an upwardly revised 151,000 jobs in March.

Economists had expected employment to increase by about 180,000 jobs compared to the addition of 129,000 jobs originally reported for the previous month.

"The economic soft patch at the start of the year has not materially impacted hiring," said Mark Zandi, chief economist of Moody's Analytics. "April's job gains overstate the economy's strength, but they make the case that expansion continues on."

However, buying interest was partly offset by the release of a separate report from the Institute for Supply Management showing the slowest pace of growth in manufacturing activity in over two years.

The ISM said its purchasing managers index slid to 52.8 in April after unexpectedly climbing to 55.3 in March, hitting its lowest level since October of 2016.

A reading above 50 still indicates growth in the manufacturing sector, although economists had expected the index to show a much more modest decrease to 55.0.

Traders also seem reluctant to make more significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to keep a close eye on the accompanying statement and Fed Chairman Jerome Powell's subsequent press conference.

Sector News

With Apple lead the sector higher following its upbeat earnings news, computer hardware stocks are seeing considerable strength in mid-day trading.

Reflecting the strength in the computer hardware sector, the NYSE Arca Computer Hardware Index is currently up by 1.5 percent.

On the other hand, gold stocks continue to see considerable weakness on the day, resulting in a 1.4 percent drop by the NYSE Arca Gold Bugs Index.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, with gold for June delivery sliding $1.80 to $1,283.90 an ounce.

Notable weakness also remains visible among telecom stocks, as reflected by the 1.3 percent loss being posted by the NYSE Arca North American Telecom Index.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region were closed on Wednesday, although Australian stocks moved notably higher. The S&P/ASX 200 Index advanced by 0.8 percent.

Meanwhile, U.K. stocks moved to the downside, while the other major European markets were closed on the day. The U.K.'s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries moved higher in reaction to the disappointing manufacturing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.1 basis points at 2.478 percent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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