Stocks Extend Yesterday's Rally After Greek Bailout Deal - U.S. Commentary

(RTTNews) - On the heels of the rally seen in the previous session, stocks saw some further upside during trading on Wednesday. With the continued strength on the day, the Nasdaq and the S&P 500 reached their best closing levels in about a month.

The major averages ended the day firmly in positive territory but off their highs for the session. The Dow climbed 145.46 points or 0.8 percent to 17,851.51, the Nasdaq advanced 33.84 points or 0.7 percent to 4,894.89 and the S&P 500 rose 14.48 points or 0.7 percent to 2,090.54.

Stocks benefited from news of a "major breakthrough" in talks between Eurozone finance ministers and Greece to unlock 10.3 billion euros in new bailout loans.

A compromise has also reportedly been reached on further debt relief that should allow the International Monetary Fund to participate in the third rescue program.

"With the fresh funds, Greece's financing requirements would be covered up to the end of the year," said Commerzbank Analyst Christoph Weil.

He added, "After a completion of the first review, the ECB should accept Greek government bonds as collateral again"

An increase by the price of crude oil also generated some buying interest, with crude for July delivery jumping $0.94 to $49.56 a barrel.

The price increase came after a report from the Energy Information Administration said crude oil stockpiles slumped by 4.2 million barrels last week.

The markets also benefited from optimism that the U.S. economy is strong enough to withstand higher interest rates after yesterday's upbeat new home sales data.

Sector News

Oil service stocks showed a substantial moved to the upside on the day, benefiting from the increase by the price of crude oil. Reflecting the strength in the sector, the Philadelphia Oil Service Index surged up by 3.8 percent.

Transocean (RIG), Bristow Group (BRS), and Weatherford (WFT) turned in some of the oil service sector's best performances.

Considerable strength was also visible among steel stocks, as reflected by the 2.7 percent gain posted by the NYSE Arca Steel Index. AK Steel (AKS) and Cliffs Natural Resources (CLF) posted standout gains.

Banking stocks also saw significant strength on the day, resulting in a 1.9 percent jump by the Dow Jones Banks Index. With the gain, the index reached its best closing level in well over four months.

Railroad, gold, biotechnology, and computer hardware stocks also moved notably higher, reflecting another day of broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 1.6 percent, while Hong Kong's Hang Seng Index spiked by 2.7 percent.

The major European markets also saw further upside following yesterday's rally. While the U.K.'S FTSE 100 Index advanced by 0.7 percent, the French CAC 40 Index jumped by 1.1 percent and the German DAX Index surged up by 1.5 percent.

In the bond market, treasuries showed a lack of direction on the day before closing slightly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.1 basis points to 1.870 percent.

Looking Ahead

A batch of U.S. economic data may attract attention on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, durable goods orders, and pending home sales.

On the earnings front, Costco (COST), HP Inc. (HPQ), and Guess? (GES) are among the companies releasing their quarterly results after the close of today's trading.

Abercrombie & Fitch (ANF), Dollar General (DG), and Sears (SHLD) are also due to release their results before the start of trading on Thursday.