Stocks Seeing Further Upside Following Early Strength - U.S. Commentary

(RTTNews) - After moving notably higher early in the session, stocks have seen some further upside over the course of the trading day on Tuesday. The rally on the day has lifted the Nasdaq and the S&P 500 to their best intraday levels in well over a month.

Currently, the major averages are just off their highs for the session. The Dow is up 252.12 points or 1.5 percent at 16,768.62, the Nasdaq is up 93.69 points or 2.1 percent at 4,651.64 and the S&P 500 is up 33.66 points or 1.7 percent at 1,965.89.

Early buying interest was generated in reaction to strength in the overseas markets, as stocks around the world have moved mostly higher on the day.

Optimism about the possibility of additional stimulus contributed to the gains following the release of some disappointing Chinese manufacturing data.

Stocks saw continued strength after the release of upbeat U.S. economic data, including a report from the Institute for Supply Management showing a bigger than expected increase by its index of manufacturing activity in February.

The ISM said its purchasing managers index rose to 49.5 in February from 48.2 in January, but a reading below 50 continues to indicate a contraction in manufacturing activity. Economists had expected the index to inch up to 48.5.

Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel indicate a more positive view of demand than in January, as 12 of our 18 industries report an increase in new orders."

A separate report from the Commerce Department showed a notable increase in construction spending in the month of January.

The report construction spending surged up by 1.5 percent to an annual rate of $1.141 trillion in January from the revised December estimate of $1.124 trillion. Spending had been expected to rise by 0.5 percent.

With the bigger than expected increase, the annual rate of construction spending reached its highest level since October of 2007.

Sector News

Steel stocks have shown a substantial move to the upside amid optimism about additional Chinese stimulus, with the NYSE Arca Steel Index surging up by 4 percent. The index has risen to a two-month intraday high.

ArcelorMittal (MT) and Cliffs Natural Resources (CLF) are turning in two of the steel sector's best performances, jumping by 9.7 percent and 7.9 percent, respectively.

Considerable strength is also visible among banking stocks, as reflected by the 4.2 percent gain being posted by the Dow Jones Banks Index. Fifth Third Bancorp (FITB) and Regions Financial (RF) are posting standout gains.

Brokerage, computer hardware, software, and railroad stocks are also seeing significant strength, reflecting broad based buying interest on Wall Street.

Meanwhile, gold stocks are among the few groups bucking the uptrend, with the NYSE Arca Gold Bugs Index tumbling by 3.5 percent. The weakness in the sector comes as gold for April delivery is slipping $1.20 to $1,233.20 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index surged up by 1.6 percent.

The major European markets also moved to the upside on the day. While the German DAX Index jumped by 2.3 percent, the French CAC 40 Index shot up by 1.2 percent and the U.K.'s FTSE 100 Index advanced by 0.9 percent.

In the bond market, treasuries have come under pressure amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.4 basis points at 1.814 percent.