Markets

U.S. Stocks Seeing Further Upside But Dow Remains Stuck In The Red

(RTTNews) - After moving higher early in the session, stocks have seen some further upside over the course of the trading day on Wednesday. With the upward move, the Nasdaq and the S&P 500 have reached new record intraday highs.

Currently, the Nasdaq is up 145.54 points or 1.3 percent at 11,612.02 and the S&P 500 is up 19.87 points or 0.6 percent at 3,463.49.

While the Nasdaq and S&P 500 have moved steadily higher, the Dow remains stuck in the red, down 13.72 points or 0.1 percent at 28,234.72.

The strength on Wall Street may partly reflect optimism about the outlook for the economy after a report from the Commerce Department showed durable goods orders spiked by much more than expected in the month of July.

The Commerce Department said durable goods orders skyrocketed by 11.2 percent in July after surging up by a revised 7.7 percent in June.

Economists had expected durable goods orders to increase by 4.3 percent compared to the 7.6 percent jump that had been reported for the previous month.

The bigger than expected leap in durable goods orders was primarily due to a sharp increase in orders for transportation equipment, which soared by 35.6 percent.

Excluding the substantial increase in orders for transportation equipment, durable goods orders rose by a much more modest 2.4 percent in July after climbing by 4.0 percent in June. The increase still exceeded estimates for 2.0 percent growth.

The report also said orders for non-defense capital goods excluding aircraft, a reading on business spending, climbed by 1.9 percent in July after surging up by 4.3 percent in June.

"With core orders now back close to pre-pandemic levels, the recovery in business equipment investment looks pretty V-shaped to us," said Michael Pearce, Senior U.S. Economist at Capital Economics.

Adding to the positive sentiment, biotechnology company Moderna (MRNA) announced promising results from a small trial of its coronavirus vaccine candidate in elderly patients.

Moderna told a government advisory committee that its experimental vaccine produced neutralizing antibodies and appeared to be well tolerated.

Meanwhile, the modest drop by the Dow is partly due to notable losses by stocks that will be removed from the blue chip index next week, namely Pfizer (PFE), Raytheon (RTX) and Exxon Mobil (XOM).

Sector News

Software stocks continue to see substantial strength in mid-day trading, with the Dow Jones U.S. Software Index soaring by 4.5 percent to a new record intraday high.

Newly named Dow component Salesforce.com (CRM) continues to lead sector higher, with the business software company spiking by 26 percent after reporting better than expected second quarter results and raising its full-year revenue guidance.

Significant strength also remains visible among gold stocks, as reflected by the 1.9 percent jump by the NYSE Arca Gold Bugs Index.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for December delivery skyrocketing $28.50 to $1,951.60 an ounce.

Retail stocks have also shown a strong move to the upside on the day, driving the Dow Jones U.S. Retail Index up by 1.4 percent to a record intraday high.

Dick's Sporting Goods (DKS) and Urban Outfitters (URBN) are posting standout gains after reporting much better than expected quarterly results.

On the other hand, energy stocks have come under pressure over the course of the session despite an uptick by the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 2.7 percent, the NYSE Arca Natural Gas Index is down by 2 percent and the NYSE Arca Oil Index is down by 1.4 percent.

Airline, utilities and banking stocks are also seeing considerable weakness in mid-day trading, partly offsetting the strength in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index closed just below the unchanged line, while China's Shanghai Composite Index tumbled by 1.3 percent.

Meanwhile, European stocks moved mostly higher on the day. The German DAX Index jumped by 1 percent, the French CAC 40 Index advanced by 0.8 percent and the U.K.'s FTSE 100 Index inched up by 0.1 percent.

In the bond market, treasuries are seeing further downside ahead of a speech by Fed Chair Jerome Powell on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 0.711 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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