Stocks Give Back Ground After Seeing Initial Strength - U.S. Commentary

(RTTNews) - After moving sharply higher at the open, stocks have given back some ground over the course of early trading on Wednesday. The major averages have pulled back well off their highs for the young session.

Currently, the major averages are clinging to modest gains. The Dow is up 22.05 points or 0.1 percent at 16,514.73, the Nasdaq is up 1.33 points or less than 0.1 percent at 4,813.26 and the S&P 500 is up 2.09 points or 0.1 percent at 1,971.50.

The initial upward move on Wall Street partly reflected a positive reaction to continued strength in the overseas markets.

Stocks in the Asia-Pacific region saw considerable strength following yesterday's rally on Wall Street, with Japan's Nikkei 225 Index soaring by 7.7 percent.

China's Shanghai Composite Index also jumped by 2.3 percent, adding to the 2.9 percent gain posted in the previous session.

Analysts suggested the continued strength among Chinese stocks was partly due to optimism that the government will take additional steps to support the economy.

Buying interest waned not long after the start of trading, however, as traders seemed reluctant to continue picking up stocks amid a lack of major U.S. economic data.

The subsequent pullback by the markets partly reflected profit taking, with biotech and semiconductor stocks coming under pressure after rising sharply on Tuesday.

On the other hand, energy stocks continue to turn in a strong performance despite a notable decrease by the price of crude oil.

Peter Cardillo, chief market economist at Rockwell Global Capital, said the persistent high volatility coupled with wider gyrations is likely to diminish investors' appetite for equities in the short run.

"On the other hand, from a technical perspective the S&P held the lower end of what could be considered a lower trading range as the markets await September's two big events, the Fed and quarterly options expiration," Cardillo said.

He added, "While the above scenario is not likely to change, we reiterate our view that the correction has found a bottom."

Among individual stocks, shares of Dave & Buster's (PLAY) are moving sharply higher in early trading after the restaurant and arcade chain reported better than expected second quarter results and provided upbeat guidance.

Retailer Conn's (CONN) is also seeing early strength after reporting second quarter results that met analyst estimates. The company also appointed Norman Miller as its President and CEO.

Meanwhile, shares of Pacific Sunwear (PSUN) have come under pressure after the apparel retailer reported a wider than expected second quarter loss and provided disappointing guidance.

In overseas trading, most stock markets across the Asia-Pacific region moved sharply higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 7.7 percent, while Hong Kong's Hang Seng Index leapt by 4.1 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has jumped by 2.1 percent, the U.K.'s FTSE 100 Index is up by 1.6 percent and the German DAX Index is up by 0.8 percent.

In the bond market, treasuries have come under pressure, extending the downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, up by 5.5 basis points at 2.249 percent.