RTTNews - After a moderate upward move at the opening bell, stocks shot higher in mid-morning trading on Friday following the release of encouraging data on the health of the housing market. The major averages are all in positive territory by substantial margins, building on three straight days of gains.

The buying interest came as existing home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors, with the headline figure rising for the fourth consecutive month.

The report showed that existing home sales rose 7.2 percent to an annual rate of 5.24 million units in July from a 4.89 million unit rate in June. Economists had been expecting a more modest increase to a 5.0 million unit rate.

The markets are also focusing on remarks from Federal Reserve Chairman Ben Bernanke, who is speaking about the recent financial crisis at the Kansas City Fed's annual conference in Jackson Hole, Wyoming.

The Fed chief stated that economic activity appears to be leveling out, both in the United States and abroad, while adding that prospects for a return to growth in the near term appear good.

However, Bernanke warned that the recovery may be sluggish at first, with unemployment declining only gradually from high levels.

Earlier this morning, traders had a chance to react to a number of earnings reports this morning, with apparel retailer Gap Inc. (GPS) reporting second quarter net income of $0.33 per share, a penny better than analyst estimates.

Ann Taylor Stores (ANN) reported adjusted second-quarter net income of $0.06 per share along with net sales of $470.23 million, while analysts forecast earnings of $0.03 per share on sales of $472.21 million.

Jelly maker J. M. Smucker Company (SJM) reported first-quarter net income of $0.83 per share, while net sales came in at $1.05 billion. Analysts expected the firm to earn $0.80 per share on revenues of $1.04 billion.

The major averages have pulled back off their best levels of the day in recent trading, although they remain firmly positive. The Dow is currently up 137.17 at 9,487.22, the Nasdaq is up 26.66 at 2,015.88 and the S&P 500 is up 16.27 at 1,023.64.

Sector News

Commercial real estate and housing stocks are turning in some of the day's best performances after the day's encouraging data. The Morgan Stanley REIT Index and the Philadelphia Housing Sector Index are up by 3.6 percent and 3.5 percent, respectively, further offsetting recent losses.

The resource sector is also seeing a strong outing, with oil service, gold and steel stocks all posting notable gains. The upward move comes amid an increase in commodity prices on the NYMEX, where gold has surged up $11.90 to $953.60 an ounce and oil is up $0.98 at $73.89 a barrel.

Banking stocks are also on the rise, as reflected by the 2.8 percent gain being shown by the Kbw Bank Index. With the advance, the index has reached a fresh eight-moth intraday high.

The index is being propelled higher by shares of Citigroup (C), which are surging up by 6.9 percent, reaching a seven-month intraday high. SunTrust (STI) is also helping to push the index higher, adding to its recent gains.

Transportation, defense, telecommunications and pharmaceutical stocks are also moving considerably higher, reflecting the day's broad based strength.

Stocks Driven By Analyst Comments

Varian Medical (VAR) is on the rise in mid-morning trading after being upgraded by Citigroup from Hold to Buy. The broker also raised its target price on the stocks to $45 from $36. The stock is up by 4.9 percent, climbing to a six-month intraday high.

Limited Brands Inc. (LTD) is also climbing after receiving an upgrade at Citigroup. The broker raised its rating to Buy from Hold, which has propelled the stock up by 7.1 percent. With the gain, the stock has risen to its best intraday level in over ten months.

On the other hand, First Solar (FSLR) is retreating following a downgrade by Jefferies & Co. to Hold from Buy. Jefferies also lowered its target price on the stock to $130 from $200. Jefferies also downgraded several other stocks in the solar energy sector. The stock is sliding by 4.1 percent, falling to a five-month intraday low.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw a mixed performance on Friday. Japan's benchmark Nikkei 225 Index slipped by 1.4 percent, while China's Shanghai Composite rose by 1.7 percent.

Meanwhile, the major European markets are surging higher, with the German DAX Index and the French CAC 40 Index rising by 3.1 percent and 2.6 percent, respectively, while the U.K.'s FTSE 100 Index is up by 1.9 percent.

In the bond markets, treasuries are seeing substantial weakness amid the strength on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.511 percent, posting a gain of 7.6 basis points.

For comments and feedback: contact editorial@rttnews.com