Stocks are seeing considerable strength in mid-afternoon trading on Wednesday, with the major averages currently all in positive territory after turning in a mixed performance throughout much of the trading session.
The strength in the markets come as traders react to some much better than expected employment data as well as media reports indicating that several banks will not need to raise additional capital.
On the economic front, Automatic Data Processing (ADP) released a report showing a continued decrease in private sector employment in the month of April, although the decrease in jobs was much smaller than economists had expected.
The report showed that non-farm private employment fell by 491,000 jobs in April following a revised decrease of 708,000 jobs in March. Economists had expected a decrease of 645,000 jobs compared to the loss of 742,000 jobs originally reported for the previous month.
In an interview with RTT News, Peter Cardillo, chief market economist at Avalon Partners, said that the ADP employment data signals that the Labor Department's monthly employment report due to be released on Friday will probably show a decrease of less than 500,000 jobs.
The markets have also benefited from media reports saying that the government stress tests have determined that JP Morgan (JPM), Goldman Sachs (GS), American Express (AXP), and Bank of New York Mellon (BK) will not need additional capital.
While the official results are not due to be released until after the close of trading on Thursday, the leaks have generated some optimism about the outlook for the financial sector.
In recent trading, the Nasdaq joined the Dow and the S&P 500 in positive territory, but it remains well off the high it set in early trading. While the Nasdaq is currently up 3.86 at 1,757.98, the Dow is currently up 91.76 at 8,502.41 and the S&P 500 is up 14.47 at 918.27.
A majority of the Dow components are currently trading in positive territory, contributing to the strong gain by the blue chip index.
Reflecting strength in the banking sector, Bank of America (BAC) and Citigroup (C) are turning in two of the Dow's best performances. Shares of Bank of America are currently up 17.9 percent, while shares of Citigroup are advancing 19.3 percent.
Entertainment giant Disney (DIS) is also turned in a particularly strong performance after reporting better than expected adjusted second quarter earnings. Shares of Disney are currently up 13.1 percent, rising to a nearly five-month intraday high.
Strong gains by American Express, JP Morgan, and General Electric (GE) are also contributing to the strong upward move by the Dow.
On the other hand, shares of General Motors (GM) are seeing considerable weakness, with the auto giant currently down 10.8 percent. The loss by GM comes ahead of the release of its first quarter results before the start of trading on Thursday.
With traders reacting positively to the reports suggesting that a number of banks don't need to raise additional capital, bank stocks are posting substantial gains, pushing the Kbw Bank Index up 13 percent. Among bank stocks, Capital One (COF) is up 21.8 percent, at a three-month high.
Resource stocks are also seeing considerable strength in mid-afternoon trading, benefiting from increases in most commodities prices. Natural gas, gold, and oil service stocks are posting particularly strong gains.
While tobacco, brokerage, and real estate stocks have also moved to the upside, significant weakness remains visible among housing stocks.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Wednesday, although the Japanese market remained closed for the third straight day. Hong Kong's Hang Seng Index jumped 2.5 percent.
The European markets also moved higher over the course of the trading, benefiting from the U.S. employment data. The U.K.'s FTSE 100 Index rose 1.4 percent, while the French CAC 40 Index and the German DAX Index advanced 1.8 percent and 0.6 percent, respectively.
In the bond market, treasuries have seen considerable volatility over the course of afternoon trading. The yield on the benchmark ten-year note is currently down less than a basis point at 3.15 percent.
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