After seeing considerable volatility earlier in the trading session, stocks are turning in a strong performance in mid-afternoon trading on Friday. The major averages are all firmly in positive territory after ending the previous session notable lower.
In an interview with RTT News, Chuck Lieberman, chief investment officer for Advisors Capital Management, discussed the market's move higher, which comes on the heels of a better than expected employment reading and the release of the results of the government stress tests.
Lieberman said, Fundamentally, the market is very well placed for a rally.I do think the stock market will continue to move higher over the balance of the year. However, he warned, It won't move in a straight line.
Before the start of trading, the Labor Department released a report showing that employment fell by 539,000 jobs in April. While the decrease reflects continued weakness in the labor market, it was much smaller than the decrease of 600,000 jobs that was expected by economists.
However, the report also showed that the unemployment rate rose to 8.9 percent in April from 8.5 percent in March. The increase, which lifted the unemployment rate to a new 25-year high, came in line with economist estimates.
Additionally, government regulators released the results of their financial stress tests late Thursday afternoon, saying that about half of the nation's biggest financial firms need to improve their capital positions in order to ensure that they can survive further economic weakness.
The results of the stress tests showed that 10 of the 19 banks tested need to raise a total of $74.6 billion. The banks involved in the exercise account for two-thirds of the assets and more than half of the loans in the U.S. banking system.
Commenting on the results of the stress tests, Lieberman said, You never can surely close the door completely, but he believes the worst is over for banks.
If nothing else, investors should be pretty comfortable with the sense that the government is going to have to stand behind these companies, he added.
In recent trading, the Dow and the S&P 500 have risen to new highs for the session, while the Nasdaq remains off its best levels. The Dow is currently up 152.05 at 8,561.90, the Nasdaq is up 19.08 at 1,735.32 and the S&P 500 is up 19.25 at 926.64.
A majority of the Dow components have climbed into positive territory over the course of the trading day, contributing to the triple-digit gain by the blue chip index.
Reflecting strength in the banking sector, JP Morgan (JPM) is turning in one of the Dow's best performances, with the financial services provider currently up 8.3 percent. Shares of JP Morgan are currently poised to end the session at a six-month closing high.
Among financial stocks, Citigroup (C), America Express (AXP), and Bank of America (BAC) are also posting significant gains.
Boeing (BA) has also shown a strong upward move on the day, with the aerospace giant currently up 4.8 percent after reaching a four-month intraday high. Caterpillar (CAT) and Chevron (CVX) are among the other Dow components posting notable gains.
On the other hand, shares of Intel (INTC) are currently down 2.9 percent, reflecting considerable weakness in the semiconductor sector. IBM (IBM) is also posting a notable loss.
After turning lower over the course of the previous session, banking stocks have shown a strong move back to the upside. The Kbw Bank Index is currently up 10.1 percent, poised to end the session at its best closing level in four months.
Significant strength is also visible among resource stocks, with natural gas stocks posting particularly strong gains. The Amex Natural Gas Index is currently up 5.3 percent, rising to a six-month intraday high.
Most of the other major sectors have also shown strong upward moves, reflecting broad based strength in the markets. Housing, brokerage, and defense stocks are posting notable gains.
Meanwhile, semiconductor stocks continue to buck the uptrend, as traders look to cash in on the recent strength in the sector. Some retail and telecom stocks are also under pressure.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Friday, reacting positively the U.S. stress test results. Japan's benchmark Nikkei 225 Index closed up 0.5 percent, at a six-month closing high.
European stocks also turned in strong performances, although they ended the session off their best levels of the day. The U.K.'s FTSE 100 Index rose 1.4 percent, while the French CAC 40 Index and the German DAX Index closed up 1.9 percent and 2.3 percent, respectively.
In the bond market, treasuries have shown a lack of direction over the course of the trading day, with the benchmark ten-year note bouncing back and forth across the unchanged line. The yield on the ten-year note is currently down less than a basis point at 3.289 percent.
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