Stocks Holding On To Modest Gains In Mid-Day Trading - U.S. Commentary

(RTTNews) - After seeing some volatility early in the session, stocks are holding on to modest gains in mid-day trading on Friday. Buying interest is somewhat subdued, however, as traders digest the latest economic and earnings news.

Currently, the major averages are hovering in positive territory. The Dow is up 60.09 points or 0.3 percent at 18,229.77, the Nasdaq is up 3.75 points or 0.1 percent at 5,219.72 and the S&P 500 is up 4.40 points or 0.2 percent at 2,137.44.

The modest strength on Wall Street comes following the release of a report from the Commerce Department showing that U.S. economic activity increased by more than expected in the third quarter.

The report said real gross domestic product climbed by 2.9 percent in the third quarter after rising by 1.4 percent in the second quarter. Economists had expected 2.5 percent growth.

The stronger than expected GDP growth in the third quarter reflects the biggest increase since a 5.0 percent jump in the third quarter of 2014.

The data has generated some optimism about the economy while also increasingly the likelihood of a near-term interest rate hike by the Federal Reserve.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The bigger than expected 2.9% annualized gain in third-quarter GDP growth confirms that the economic recovery has regained some of the momentum lost within the last year."

"As such, this leaves the Fed firmly on track to raise interest rates in December and a hike at next week's FOMC meeting isn't entirely out of the question," he added.

Meanwhile, a separate report from the University of Michigan showed that consumer sentiment deteriorated by more than previously estimated in the month of October.

The University of Michigan said its consumer sentiment index for October was downwardly revised to 87.2 from the preliminary reading of 87.9. The index is down from September's final reading of 91.2.

The downward revision came as a surprise to economists, who had expected the consumer sentiment index to be upwardly revised to 88.5.

On the earnings front, shares of Hershey (HSY) have moved sharply higher on the day after the chocolate maker reported better than expected third quarter results.

Energy giant Chevron (CVX) has also moved to the upside after reporting third quarter results that exceeded expectations on both the top and bottom lines.

Meanwhile, shares of Amazon (AMZN) have moved notably lower after the online retailer reported third quarter earnings that came in below estimates.

Sector News

Computer hardware stocks have shown a strong move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 1.5 percent. The index continues to regain ground after hitting a one-month closing low last Friday.

Super Micro Computer (SMCI) is leading the hardware sector higher, with the server technology company jumping 12.2 percent after reporting better than expected third quarter results.

Considerable strength is also visible among housing stocks, as reflected by the 1.2 percent gain being posted by the Philadelphia Housing Sector Index. With the gain, the index is rebounding from its lowest closing level in three months.

On the other hand, pharmaceutical stocks are seeing significant weakness, resulting in a 2.2 percent drop by the NYSE Arca Pharmaceutical Index. The index has fallen to its lowest intraday level in over eight months.

Novo Nordisk (NVO) is posting a steep loss after the company reported stronger than expected third quarter profit growth but slashed its long-term growth forecast.

Notable weakness among retail, health care, and biotechnology stocks is also limiting the upside for the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

The major European markets also ended the day mixed. While the German DAX Index edged down by 0.2 percent, the U.K.'s FTSE 100 Index inched up by 0.1 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries have climbed back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.850 percent.