Stocks Move Modestly Higher, Dow Snaps 7-Day Losing Streak - U.S. Commentary

(RTTNews) - While buying interest was somewhat subdued, stocks moved modestly higher over the course of the trading session on Wednesday. With the slim gains on the day, the Dow closed higher for the first time in eight sessions.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow edged up 41.23 points or 0.2 percent to 18,355.00, the Nasdaq climbed 22.00 points or 0.4 percent to 5,159.74 and the S&P 500 rose 6.76 points or 0.3 percent to 2,163.79.

The higher close on Wall Street was partly due to significant strength that emerged among energy stocks, which moved higher along with the price of crude oil.

After ending the previous session below $40 a barrel for the first time since April, crude for September delivery jumped $1.32 to $40.83 a barrel.

The increase by the price of crude oil came after a report from the Energy Information Administration showed a steep drop in gasoline inventories last week.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index surged up by 3.3 percent, while the NYSE Arca Oil & Gas Index and the Philadelphia Oil Service Index climbed by 1.9 percent and 1.7 percent, respectively.

Brokerage stocks also showed a strong move to the upside on the day, driving the NYSE Arca Broker/Dealer Index up by 1.9 percent. The gain by the index came after it moved notably lower over the past few sessions.

Stifel Financial (SF) helped to lead the brokerage sector higher after reporting second quarter earnings that exceeded analyst estimates.

Steel, railroad, and banking also saw notable strength, while gold stocks gave back ground along with the price of the precious metal.

However, traders seemed somewhat reluctant to make more significant moves following the release of a mixed batch of U.S. economic data.

While payroll processor ADP released a report showing stronger than expected private sector job growth, a report from the Institute for Supply Management showed a slowdown in service sector growth.

ADP said private sector employment increased by 179,000 jobs in July after climbing by an upwardly revised 176,000 jobs in June.

Economists had expected employment to grow by about 170,000 jobs compared to the addition of 172,000 jobs originally reported for the previous month.

Meanwhile, the ISM said its non-manufacturing index declined to 55.5 in July after jumping to a seven-month high of 56.5 in June.

A reading above 50 indicates continued growth in the service sector, but economists had expected the index to show a more modest drop to 56.0.

Traders were also likely looking ahead to the Bank of England's highly anticipated monetary policy announcement on Thursday

Most analysts expect the BoE to announce an interest rate cut in reaction to Britain's recent vote to leave the European Union.

Last month, the BoE unexpectedly refrained from cutting rates but signaled more action this month after getting more assessments on economic growth.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved notably lower during trading on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index tumbled by 1.9 percent and 1.8 percent, respectively.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both edged down by 0.2 percent.

In the bond market, treasuries closed roughly flat after recovering from an early move to the downside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.542 percent.

Looking Ahead

The BoE's monetary policy decision is likely to be in focus on Thursday, potentially overshadowing U.S. reports on weekly jobless claims and factory orders.

On the earnings front, 21st Century Fox (FOXA), Allstate (ALL), GoDaddy (GDDY), Jack In The Box (JACK), Metlife (MET), and Tesla Motors (TSLA) are among the companies releasing their quarterly results after the close of today's trading.

Chesapeake Energy (CHK), Cooper Tire (CTB), Kellogg (K), Nokia (NOK), and Viacom (VIAB) are also due to report their results before the start of trading on Thursday.