Stocks Holding On To Strong Gains After Early Rally - U.S. Commentary

(RTTNews) - After moving sharply higher early in the session, stocks continue to turn in a strong performance in mid-day trading on Tuesday. The strong gains on the day have partly offset the sharp pullback that was seen last week.

The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 245.19 points or 1.5 percent at 16,347.57, the Nasdaq is up 80.28 points or 1.7 percent at 4,764.20 and the S&P 500 is up 27.68 points or 1.4 percent at 1,948.90.

The initial strength on Wall Street was partly in reaction to strength among Chinese stocks, which surged higher in the latter part of the trading day.

China's Shanghai Composite Index jumped by 2.9 percent on the day, contributing to a rally in other overseas markets.

The late-day strength in the Chinese market suggests state intervention despite recent reports indicating the government abandoned attempts to boost the stock market through large-scale share purchases.

Nonetheless, traders seem somewhat reluctant to make more significant moves amid a lack of major U.S. economic data on the day.

The economic calendar remains relatively light throughout the holiday-shortened week, although traders are likely to keep a close eye on reports on weekly jobless claims, producer prices, and consumer sentiment.

Last week's mixed jobs data is likely to increase the focus on the other economic reports due to be released in the days leading up to the Federal Reserve's monetary policy announcement next week.

Among individual stocks, shares of Teco Energy (TE) have moved sharply higher after the electric and gas utility holding company agreed to be acquired by Canadian energy company Emera for $6.4 billion.

Diversified media company Meredith (MDP) is also turning in a strong performance after agreeing to be acquired by Media General (MEG) in an approximately $2.4 billion cash-and-stock deal.

On the other hand, shares of Concordia (CXRX) have come under pressure after the healthcare company agreed to buy Amdipharm Mercury Ltd. for about $3.5 billion in cash and stock.

Sector News

Semiconductor stocks continue to see substantial strength in mid-day trading, with the Philadelphia Semiconductor Index jumping by 3.2 percent. With the gain, the index has reached its best intraday level in about three weeks.

Microchip Technology (MCHP) has helped to lead the semiconductor sector higher after raising its second quarter earnings and sales guidance.

Considerable strength also remains visible among steel stocks, as reflected by the 2.7 percent gain being posted by the NYSE Arca Steel Index. Brazil's CSN (SID) is posting a standout gain.

Most of the other major sectors have also moved to the upside on the day, reflecting broad based buying interest on Wall Street.

Railroad, computer hardware, and gold stocks are seeing notable strength, with gold stocks moving higher along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index plunged by 2.4 percent, while Hong Kong's Hang Seng Index surged up by 3.3 percent.

Meanwhile, the major European markets all moved sharply higher on the day. While the German DAX Index jumped by 1.6 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index surged up by 1.2 percent and 1.1 percent, respectively.

In the bond market, treasuries have shown a notable move back to the downside after moving higher last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6 basis points at 2.188 percent.