Stocks are continuing to show significant strength during early afternoon trading on Wednesday as investors respond well to some strong economic news as well as President Barack Obama's attempts to defend his budget proposal.
Speaking at his second televised news conference from the White House on Tuesday, President Obama said he was confident that the people would have patience and recognize that the economy is more like an ocean liner than a speedboat and takes time to change course.
Facing criticism from Capitol Hill that his proposed spending plans are too ambitious for a time of economic crisis, Obama sought to portray his budget proposal as a key element of the nation's economic recovery.
Obama said his budget sought to bring about broad economic growth by moving from an era in which we borrow and spend to one of saving and investing.
President Obama's Budget director Peter Orszag spoke earlier, noting that while there are changes being made in both the House and Senate, the budget resolutions are in the same family as Obama's original proposal.
Speaking with reporters, Orszag addressed concerns that the deficit is too large and could have a crippling effect on future generations, emphasizing that the Obama administration is merely trying to lay the foundation for strong growth in the future.
In economic news, the Commerce Department released a report revealing that durable goods orders unexpectedly showed a substantial increase in the month of February after falling in each of the six previous months.
The report showed that durable goods orders jumped 3.4 percent in February after falling by a revised 7.3 percent in January. Economists had been expecting durable goods orders to fall by 2.5 percent compared to the 4.5 percent decrease that had been reported for the previous month.
Excluding the impact of orders for transportation equipment, durable goods orders jumped 3.9 percent for the month, compared to expectations of a 2.0 percent decline.
The Commerce Department also released a separate report showing an unexpected in increase in new home sales in the month of February, continuing a recent string of better than expected housing market reports.
The report showed that new home sales rose 4.7 percent to an annual rate of 337,000 in February from an upwardly revised January rate of 322,000. The results surprised economists, who had been expecting sales to fall to 300,000 from the 309,000 originally reported for the previous month.
The major averages have moved to the downside in recent trading, although they are currently holding onto strong gains. The Dow is currently up 131.82 at 7,791.79, the Nasdaq is up 19.93 at 1,536.45 and the S&P 500 is up 11.66 at 817.91.
While housing and banking stocks are continuing to lead the gains in the broader markets, airline stocks are also climbing considerably higher.
Currently, the Amex Airline Index is up 4.7 percent, led by a 5.6 percent gain by SkyWest (SKYW), which has risen to a level that challenges a recent one-month closing high.
Gold stocks are also posting gains, responding to some strength in the price of the precious metal. With the price of gold rising $3.50 to $929.50 an ounce, the Amex Gold Bugs Index is posting a gain of 3.9 percent.
Healthcare provider and health insurance stocks are also posting considerable gains on the day, with the Morgan Stanley Healthcare Provider Index up 3.1 percent and the Morgan Stanley Healthcare Payor Index is up 2.8 percent.
Most of the other major sectors have also shown strong upward moves over the course of the session, reflecting broad based strength in the markets.
Stocks In The News
Among individual stocks, Jabil Circuit Inc. (JBL) is up 33.6 percent on the session as investors respond to some positive earnings news. With the advance, the stock has climbed to its highest level in about a month.
The company reported adjusted second quarter earnings of $0.13 per share compared to $0.20 per share in the same quarter last year. On average, analysts expected the company to report earnings of $0.12 per share.
Additionally, Blockbuster Inc. (BBI) is posting a gain of 8.9 percent after the movie rental chain and TiVo Inc. (TIVO) announced that they are joining forces to deliver Blockbuster's vast library of premium digital movie titles directly to the television set via TiVo's digital video recorders.
Meanwhile, DryShips Inc. (DRYS) is suffering a loss of 10.7 percent after the company reported a fourth quarter net loss of $18.42 per share, compared to a profit of $5.35 per share in the year-ago quarter.
Excluding items, net income for the latest quarter was $0.43 per share. On average, analysts expected the company to report earnings of $0.66 per share for the quarter.
In overseas trading, stock markets across the Asia-Pacific market turned in a mixed performance on Wednesday. While Japan's benchmark Nikkei 225 Index fell 0.1 percent, South Korea's KOSPI posted a gain of 0.6 percent.
Meanwhile, the major European markets are seeing some strength. The U.K.'s FTSE 100 Index is up 0.2 percent, while the French CAC 40 Index and the German DAX Index are posting gains of 0.5 percent and 1.2 percent, respectively.
In the bond market, treasuries are continuing to suffer losses on the day, but have come off their lows of the day. Subsequently, the yield on the benchmark 10-year note is up 7.2 basis points at 2.726 percent.
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