RTTNews - Stocks continue to see strong gains in mid-afternoon trading on Wednesday, inching even higher after a rally was sparked early on following the day's earnings and economic reports. The major averages are all firmly in positive territory, looking to build on the gains seen in the previous two sessions.
The equity markets have seen additional gains after the Federal Reserve revealed it expects a less severe contraction in 2009 and a moderately stronger recovery in 2010.
The minutes of the June meeting of the Federal Open Market Committee released this afternoon showed that the GDP estimates were revised to show a smaller than expected decrease in 2009 and a bigger than expected increase in 2010.
At the same time, the Fed said it expects the unemployment rate to come in higher than previously estimated based on the incoming employment data.
Earlier, the broader markets focused on earnings reports, headed by Intel (INTC), which beat analysts' second quarter earnings estimates. While Yum! Brands (YUM) also beat expectations, Abbott Labs (ABT) and Altera (ALTR) reported earnings that came in line with estimates.
The major averages have risen to new highs for the session in recent trading after moving roughly sideways earlier in the afternoon. The Dow is currently up 229.06 at 8,588.55, the Nasdaq is up 55.99 at 1,855.72 and the S&P 500 is up 24.17 at 930.01.
Nearly all of the Dow components are trading in positive territory in mid-afternoon trading, contributing to the standout gain by the blue chip index.
American Express (AXP) has helped to lead the Dow higher, with the credit card giant currently up 11.5 percent. With the upward move, the stock has reached its best intraday level in over a month.
Intel is also turning in an outstanding performance, soaring by 7 percent on the session. The day's advance has lifted the shares the semiconductor giant to their best intraday price in nine months. The firm has moved higher on the heels of its second quarter earnings announcement.
Further, Cisco (CSCO), General Electric (GE) and DuPont (DD) are also moving higher by considerable margins, extending their gains for the fourth straight session. The stocks have also reached their best intraday levels in one month's time.
Construction related firms Caterpillar (CAT) and Alcoa (AA) are also on the rise along with financial giants Bank of America (BAC) and JP Morgan Chase (JPM). The financial firms have reached their highest intraday levels since early June.
Bucking the day's uptrend are shares of McDonald's (MCD), which have fallen by a modest margin of 0.8 percent.
Resource stocks are continuing their strong performance in mid-afternoon trading, with steel stocks rising by a notable margin. The NYSE Arca Steel Index is up by 6.6 percent on the day, extending its move away from a seven-week closing low set last Wednesday.
While gold stocks are also extending their upward move based on an increase in the price in the precious metal, technology-related stocks have also continued to surge based on Intel's earnings. Networking, semiconductor, and software stocks are all posting strong gains.
Additionally, banking and airline stocks are also seeing strong gains, with the Kbw Bank Index and the NYSE Arca Airline Index advancing by 4.5 percent and 4.9 percent, respectively. The bank index is poised to close at its best level in a month, while the airline index is on pace to finish at its highest level in just over two months.
Defense, brokerage and biotechnology stocks are also on the rise, while trucking stocks continue to buck the day's rally, with the Dow Jones Trucking Index down by 2.4 percent.
In Focus: Earnings, Economic Data
On the earnings front, Abbott Laboratories reported adjusted second quarter earnings of $0.89 per share, up from $0.84 per share in the year ago quarter. The quarterly results were in-line with Wall Street estimates of $ 0.89 per share for the quarter.
Yum! Brands reported adjusted second quarter earnings of $0.50 per share, up from $0.45 per share in the year-ago quarter. Analysts forecast quarterly earnings of $0.43 per share. Looking ahead, the firm maintained its expectation for full year adjusted earnings of $2.10 per share, representing 10 percent growth.
On the economic front, a report from the U.S. Labor Department revealed that consumer prices climbed 0.7 percent in June compared to the previous month. Economists had projected an advance of about 0.6 percent.
Compared to the same period last year, consumer prices were down 1.4 percent, the largest year-over-year decline since 1950.
Core prices, which exclude the volatile food and energy sectors, advanced 0.2 percent compared to the previous month. Economists had expected an increase of 0.1 percent.
Meanwhile, a report from the New York Fed said its general business conditions index rose to a negative 0.6 in July from a negative 9.4 in June, with a negative reading indicating a contraction in activity. Economists had been expecting a more modest increase to a reading of negative 5.0.
Data from the Federal Reserve showed that industrial production fell 0.4 percent in June following a revised 1.2 percent decrease in May. Economists had expected production to fall by 0.6 percent compared to the 1.1 percent drop originally reported for the previous month.
With the slowdown, industrial production fell at its slowest pace since the 1.3 percent jump that was seen in October of 2008.
In overseas trading, stock markets across the Asia-Pacific region saw another day of gains on Wednesday, with Hong Kong's Hang Seng Index climbing by 2.1 percent. Japan's benchmark Nikkei 225 Index edged up by a more modest 0.1 percent.
The major European markets closed on the upside for the third session in a row, with the German DAX Index and the French CAC 40 Index closing up by 3.1 percent and 2.9 percent, respectively. The U.K.'s FTSE 100 Index also moved higher, climbing by 2.6 percent.
In the bond markets, treasuries have extended their losses amid the rally on Wall Street. Subsequently the yield on the benchmark ten-year note is trading at 3.584 percent, representing a gain of 13.7 basis points.
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