Stocks Continue To See Modest Strength In Mid-Day Trading - U.S. Commentary

(RTTNews) - While buying interest has been somewhat subdued, stocks continue to see modest strength in mid-day trading on Wednesday. The gains on the day are extending a recent upward trend, with the major averages moving higher for the fifth consecutive session.

Currently, the major averages are clinging to slim gains. The Dow is up 8.88 points or 0.1 percent at 18,062.46, the Nasdaq is up 9.88 points or 0.2 percent at 5,114.77 and the S&P 500 is up 1.59 points or 0.1 percent at 2,110.54.

The modest strength on Wall Street comes as traders are keeping a close eye on Federal Reserve Chair Janet Yellen's testimony before the House Financial Services Committee.

In prepared remarks, Yellen reiterated her belief that it would be appropriate to raise interest rates before year-end if the economy evolves as expected, although she noted the timing of the first rate hike will be determined on a meeting-by-meeting basis.

The Fed Chief also said labor market conditions have improved substantially but are not yet consistent with maximum employment.

Traders are also digesting the latest batch of U.S. economic data, including a report from the Fed showing a slightly bigger than expected increase in industrial production in June.

The Fed said industrial production increased by 0.3 percent in June after edging down by 0.2 percent in May. Economists had expected production to rise by 0.2 percent.

A separate report from the Labor Department showed that producer prices rose by slightly more than expected in the month of June.

The Labor Department said its producer price index rose by 0.4 percent in June following a 0.5 percent increase in May. Economists had expected prices to climb by 0.3 percent.

Excluding food and energy prices, core producer prices increased by 0.3 percent in June after edging up by 0.1 percent in the previous month. Core prices had been expected to show another 0.1 percent uptick.

Traders may be reluctant to make significant moves, as the Greek parliament is scheduled to vote on the conditional bailout agreement that includes several tough austerity measures.

Sector News

Many of the major sectors are showing only modest moves in mid-day trading, although considerable strength remains visible among biotechnology stocks. The NYSE Arca Biotechnology Index is up by 1.5 percent after reaching a record intraday high.

Celgene (CELG) has helped to lead the biotech sector higher, jumping 9 percent after announcing an agreement to acquire Receptos (RCPT) for $7.2 billion in cash.

Banking stocks also continue to see significant strength on the day, resulting in a 1.1 percent gain by the Dow Jones Banks Index. U.S. Bancorp (USB) and Bank of America (BAC) are posting strong gains after reporting their second quarter results.

Meanwhile, oil service stocks have come under pressure over the course of the session, dragging the Philadelphia Oil Service Index down by 2.5 percent. The weakness in the sector comes as crude oil for August delivery is tumbling $1.14 to $51.90 a barrel.

Steel, gold, and airline stocks are also seeing notable weakness in mid-day trading, partly offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved higher on Wednesday. Japan's Nikkei 225 Index rose by 0.4 percent, and Australia's All Ordinaries Index advanced by 1 percent. However, China's Shanghai Composite Index bucked the uptrend and tumbled by 3 percent.

Meanwhile, the major European markets saw modest strength on the day. While the U.K.'s FTSE 100 Index ended the day unchanged, the German DAX Index and the French CAC 40 Index rose by 0.2 percent and 0.3 percent, respectively.

In the bond market, treasuries have moved modestly higher after showing a lack of direction earlier in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.6 basis points at 2.383 percent.