RTTNews - After pulling off of their highs in the middle of the session, stocks have regained some momentum and are firming their presence in positive territory in mid-afternoon trading on Wednesday. The major averages are all currently in positive territory, building on their gains in recent trading.
Traders digested the latest minutes of the Federal Open Market Committee released earlier this afternoon, which revealed some debate within the policymaking arm of the Federal Reserve over whether or not to purchase additional treasury securities.
Although the final decision was to stick with the $300 billion agreed on at the March meeting, in late April some officials thought that purchasing more could spur recovery.
While there was some debate over whether or not additional purchases would be needed, officials agreed that such a purchase was not warranted at that time.
Earlier, traders digested comments from treasury Secretary Timothy Geithner who issued cautious optimism regarding the recovery of the embattled financial sector, while Bank of America (BAC) was able to raise a substantial amount of capital, further bolstering prospects for the industry. The day's trading was also impacted by better-than-expected earnings from Target (TGT) and Deere (DE).
The major averages have moved off of their worst levels of the day, solidifying their gains in recent trading. The Dow is currently up by 14.57 to 8489.42, the Nasdaq is up 8.60 to 1743.14, and the S&P 500 is up by 3.37 to 911.50.
Most Dow components are seeing gains on the day, helping the blue chip index hold on to its modest gains in mid-afternoon trading.
Notable strength has emerged in shares of McDonald's (MCD), which is up by 5.3 percent on the day. The advance was prompted by an upgrade from Deutsche Bank, which changed its rating from Hold to Buy on the stock of the fast food giant following a cash flow evaluation.
With the climb, the stock has posted its highest level since mid-February, a 3-month high.
The Dow is also being helped by shares of General Motors (GM) and Procter & Gamble (PG) up by 12.6 and 2.8 percent, respectively.
The Dow is being limited by shares of Hewlett Packard (HPQ), JP Morgan Chase (JPM) and Home Depot (HD), which are all down by at least 2.2 percent.
Most major sectors continue to show strength in mid-afternoon trading, helping the major averages firm up their gains.
Contributing to the upward move on the day are gold stocks , with gains visible in the Amex Gold BUGS Sector Index, which has risen by 5.5 percent. Specifically shares of Randgold Resources (GOLD) have skyrocketed, climbing by 5.4 percent while reaching a new high.
Notable gains have emerged in healthcare provider stocks, with the Morgan Stanley Healthcare Provider Index up by 4.5 percent on the day. With the climb, the index has beaten its best level of the year, set earlier this month. The advance has also bolstered the index to its best level since early October.
Strength continues among oil service stocks, with the Philadelphia Oil Services Sector index climbing by 2.9 percent. Oil has been boosted by gains in oil futures in the commodity markets.
On the other hand, the major averages are being dragged down by weakness in banking, utilities and computer hardware stocks, down by at least 1.0 percent.
In Focus: Geithner Comments, Corporate Earnings, Fed Buyback
Traders considered comments from Treasury Secretary Timothy Geithner who testified before lawmakers earlier, updating them on the progress of the $700 billion financial rescue plan known as the Troubled Asset Relief Program, or TARP. Geithner said that the financial system is stabilizing, and issued a timeline for further action by the Treasury.
Although stating a pick up in outlook, Geithner cautioned that it will take time for a full recovery.
The testimony came while President Obama held his first quarterly meeting with a 16 member economic advisory board, tasked with providing outside perspective for the administration.
Trader optimism picked up earlier in light of some positive news from the financial sector, as some major banks look to begin a pay back of government bail-out funds.
Relieving some of the concern about the embattled sector was Bank of America's (BAC) sale of common stock, which brought in $13.47 billion in fresh capital for the financial giant. The sale is part of the company's efforts to address a $33.9 billion capital shortfall identified by the U.S. government following the conclusion of the stress test of the nation's nineteen largest banks.
On the earnings front, discount retailer Target (TGT) reported first quarter earnings that beat out analyst forecasts by a dime. Traders have reacted positively to the earnings news, driving the stock up by 4.3 percent on the day.
Meanwhile, the world's largest agricultural equipment manufacturer Deere (DE), reported second quarter net income that edged out analyst estimates. The firm's stock advanced following the report, climbing by 2.1 percent on the session.
In other news, the New York arm of the Federal Reserve purchased $7.7 billion worth of securities with maturity dates ranging from February of 2016 to May of 2019 late in the morning. The day's buyback attracted considerably strong interest, with a total of $37.18 billion in treasuries submitted for the purchase.
Overall, the government has bought back $115.58 billion in treasuries since the program began on March 25th.
In overseas trading, stock markets across the Asia-Pacific region finished mixed on Wednesday. Japan's benchmark Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index fell 0.3 percent.
Meanwhile, the major European markets closed Wednesday's session mixed. The French CAC 40 Index finished up 0.8 percent, while the German DAX Index also closed up, rising by 1.6 percent on the session. On the other hand, the U.K.'s FTSE 100 Index closed down by 0.3 percent.
In the bond markets, treasuries have seen some volatility on the day, but surged following the release of the Fed minutes. Subsequently, the yield on the benchmark ten-year note is down 5.4 basis points, at 3.189 percent.
For comments and feedback: contact firstname.lastname@example.org