U.S. Stocks Once Again Reach Best Levels In Over A Year

Stocks fluctuated after an early move to the upside but largely managed to maintain a positive bias throughout the trading day on Wednesday. The major averages once again climbed to their highest closing levels in over a year.

The major averages all closed in positive territory, although the tech-heavy Nasdaq inched up just 4.38 points or less than a tenth of a percent to 14,358.02. The Dow climbed 109.28 points or 0.3 percent to 35,061.21 and the S&P 500 rose 10.74 points or 0.2 percent to 4,565.72.

The strength on Wall Street extended the upward trend seen for much of the past two weeks, with the Dow closing higher for the eighth consecutive session.

Encouraging inflation data helped trigger the recent advance, as traders grow increasingly optimistic the Federal Reserve is nearing the end of its interest rate hikes.

The Fed is still widely expected to raise rates by another quarter point next week, but traders are hopeful that will be the last.

Data indicating the economy has held up relatively well in spite of the Fed’s aggressive rate hikes has also led to confidence the economy will avoid a “hard landing.”

Largely upbeat earnings news has added to the positive sentiment, with regional banks U.S. Bancorp (USB), Ally Financial (ALLY) and Citizens Financial (CFG) posting standout gains after reporting better than expected quarterly earnings.

Meanwhile, traders shrugged off a Commerce Department report showing a sharp pullback in housing starts in the month of June.

The Commerce Department said housing starts plunged by 8.0 percent to an annual rate of 1.434 million in June after spiking by 15.7 percent to a revised rate of 1.559 million in May.

Economists had expected housing starts to plummet by 9.3 percent to a rate of 1.480 million from the 1.631 million originally reported for the previous month.

The report said building permits also tumbled by 3.7 percent to an annual rate of 1.440 million in June after surging by 5.6 percent to a revised rate of 1.496 million in May.

Building permits, an indicator of future housing demand, were expected to edge down by 0.1 percent to a rate of 1.490 million from the 1.491 million originally reported for the previous month.

Sector News

Telecom stocks showed a substantial move to the upside on the day, extending the recovery from the sell-off seen on Friday and Monday.

The NYSE Arca North American Telecom Index spiked by 3.7 percent, climbing further off its lowest closing level in over three years.

Significant strength was also visible among banking stocks, as reflected by the 2.6 percent jump by the KBW Bank Index. With the gain, the index reached a four-month closing high.

Airline, utilities and commercial real estate stocks also saw notable strength on the day, while steel and semiconductor stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index shot up by 1.2 percent, while Australia’s S&P/ASX 200 Index rose by 0.6 percent.

Most European stocks also moved to the upside on the day. The U.K.’s FTSE 100 Index surged by 1.8 percent and the French CAC 40 Index inched up by 0.1 percent, although the German DAX Index bucked the uptrend and edged by 0.1 percent.

In the bond market, treasuries moved higher over the course of a volatile session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.7 basis points to 3.742 percent.

Looking Ahead

The latest earnings news may be in the spotlight on Thursday, with IBM Corp. (IBM), Netflix (NFLX) and Tesla (TSLA) among the companies releasing their quarterly results after the close of today’s trading.

American Airlines (AAL), Johnson & Johnson (JNJ) and Travelers (TRV) are also among the companies due to report their quarterly results before the start of trading on Thursday.

Trading may also be impacted by reaction to reports on weekly jobless claims, Philadelphia-area manufacturing activity and existing home sales.

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