21.11.2014 18:03:04
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Stocks Give Back Ground But Remain Mostly Positive - U.S. Commentary
(RTTNews) - After moving sharply higher at the start of trading on Friday, stocks have given back some ground over the course of the session. The major averages have pulled back well off their highs for the session but remain in positive territory.
Currently, the major averages are holding on to moderate gains. The Dow is up 112.70 points or 0.6 percent at 17,831.70, the Nasdaq is up 19.43 points or 0.4 percent at 4,721.30 and the S&P 500 is up 11.54 points or 0.6 percent at 2,064.29.
The initial strength on Wall Street was partly due to news that China's central bank cut its benchmark interest rates for the first time since July of 2012.
The People's Bank of China said the one-year lending rate was reduced by 0.4 percentage points to 5.6 percent, while the one-year deposit rate was lowered by 0.25 percentage points to 2.75 percent.
The move was seen as part of an effort by the Chinese government to combat recent signs of sluggishness in the world's second largest economy.
Peter Boockvar, managing director at the Lindsey Group, said, "The cost of credit in China is now modestly lower but we'll have to see whether it helps the supply of it and demand for it."
"Big state companies have easy access to credit and it's why Chinese authorities have taken steps to help small and medium sized businesses," he added.
Positive sentiment was also generated by comments from European Central Bank President Mario Draghi indicating that the bank may broaden its asset purchases in an effort to boost inflation.
"We will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us," Draghi said.
He added, "If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases."
Boockvar said the global monetary party will be "full on and all in" assuming Draghi follows through on government bond purchases.
However, the focus on developments overseas came amid a quiet day on the U.S. economic front, leading to a lack of follow-through on the initial upward move.
Sector News
While many of the major sectors have pulled back off their best levels of the day, significant strength remains visible among steel stocks. The NYSE Arca Steel Index is up by 3.5 percent, climbing further off the one-year low set on Wednesday.
Cliffs Natural Resources (CLF), Allegheny Technologies (ATI) and Ryerson (RYI) are posting notable gains amid optimism about the outlook for Chinese demand.
Energy stocks are also holding on to strong gains even though the price of crude oil has pulled back well off its high for the session. After reaching a high of $77.83 a barrel, crude for January delivery is currently up $0.16 at $76.01 a barrel.
Chemical, housing, and tobacco stocks are also seeing continued strength in mid-day trading, while most of the other major sectors are showing more modest moves.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index rose by 0.3 percent and 0.4 percent, respectively, while China's Shanghai Composite Index jumped by 1.4 percent.
The major European markets also showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index surged up by 1.1 percent, the German DAX Index and the French CAC 40 Index rallied by 2.6 percent and 2.7 percent, respectively.
In the bond market, treasuries have moved modestly higher over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 2.321 percent.
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