RTTNews - Following a mixed finish in the previous session, stocks are turning in a strong performance in mid-morning trading on Wednesday. The major averages are all in firmly positive territory, adding to gains posted at the opening bell.
Trader optimism has picked up 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. Traders are also digesting Treasury Secretary Timothy Geithner comments before a Senate panel on the topic. Mr. Geithner has recently remarked that he has seen some positive signs in the embattled financial sector.
The testimony comes while Former Fed Chairman Paul Volcker convenes a high profile economic panel tasked with advising President Obama.
Further elevating prospects in the financial 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.
Further, traders will focus on the release of minutes from the Federal Open Market Committee's April meeting. Market players will look to the minutes to gain some near-term economic outlook and any hint of policy moves by the Fed. The minutes are scheduled for release at 2:00 p.m. ET.
On the earnings front, discount retailer Target (TGT) reported earnings of $0.69 per share compared to $0.74 per share in the same quarter of last year. The figure edged out analyst estimates who had forecast earnings of $0.59 per share. Traders have reacted positively to the earnings news, with the stock up by 5.7 percent on the day.
Meanwhile, the world's largest agricultural equipment manufacturer Deere (DE), reported second quarter net income of $1.11 per share compared to $1.74 per share in the same period last year. The results beat analyst forecasts which estimated the firm to report earnings of $1.07 per share. The firm's stock has advanced following the report, climbing by 7.0 percent on the day.
In other news, the bond markets are absorbing another quantitative easing move by the Federal Reserve. The New York arm of the Federal Reserve is buying treasuries this morning with maturity dates ranging from February of 2016 to May of 2019. The purchase results are set to be released at 11:00 a.m. ET.
Prior to today's purchase, the government has bought back $107.88 billion in treasuries since the purchase program began on March 25th.
The major averages have moved off of their best levels of the day, but remain in firmly positive territory. The Dow is currently up by 88.49 to 8563.10, the Nasdaq is up 28.32 to 1763.15, and the S&P 500 is up by 13.41 to 921.54.
Most sectors are showing considerable gains in early trading, reflecting the broad based gains seen on the day.
Significant strength has emerged among steel stocks, with notable gains visible in the Amex Steel Index, which is up by 5.6 percent on the day. With the advance, the sector index has climbed to its highest level of the year and posted its best level since early October.
Also contributing to the upward move on the day are gold and oil stocks, with the Amex Gold BUGS index and Philadelphia Oil Services Sector index climbing by 5.3 and 4.8 percent, respectively. The move has come as gold and oil futures have gained on the day in commodities trading on the NYMEX.
On the other hand, the major averages are being limited by some minor losses in utility and computer hardware stocks.
Stocks Driven By Analyst Comments
Shares of McDonald's (MCD) are on the rise in light of an upgrade by Deutsche Bank from a Hold to a Buy rating based on cash flow evaluation. The stock has risen by 3.5 percent on the day, rising to its highest level since mid-April.
Meanwhile, Costco (COST) is also gaining on the day following and upgrade by Credit Suisse to Outperform from Neutral. The stock's target price has also been boosted to $55 from $39. Shares of the wholesaler are up by 4.3 percent on the day, reaching at 4-month high.
On the other hand, shares of Colgate (CL) are down on the day, following a downgrade at Barclays Capital. The stock was downgraded to Equal Weight from Overweight prompting some of the day's retreat. The stock is currently down 0.4 percent on the day.
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 are turning in a moderately strong performance. The French CAC 40 Index is up 1.0 percent, while the German DAX Index is also up, rising by 1.7 percent. The U.K.'s FTSE 100 Index is has inched back into positive territory, now up by 0.7 percent.
In the bond markets, treasuries have seen some volatility on the day, but are currently in positive territory. Subsequently, the yield on the benchmark ten-year note is down 0.07 basis points at 3.236 percent.
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