Stocks Close Sharply Higher Following Yesterday's Sell-Off - U.S. Commentary

(RTTNews) - Following the sell-off seen in the previous session, stocks showed a strong move back to the upside during trading on Wednesday. The markets benefited from a positive reaction to the latest batch of economic news.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 293.03 points or 1.8 percent to 16,351.38, the Nasdaq soared 113.87 points or 2.5 percent to 4,749.98 and the S&P 500 surged up 35.01 points or 1.8 percent to 1,948.86.

The strength on Wall Street was partly due to bargain hunting, with traders picking up stocks at reduced levels following the steep drop seen on Tuesday.

Traders also reacted positively to the release of payroll processor ADP's report on private sector employment in the month of August.

The report showed a notable increase in private sector employment during the month, although the pace of job growth fell short of economist estimates.

ADP said private sector employment climbed by 190,000 jobs in August following a downwardly revised increase of 177,000 jobs in July.

Economists had expected employment to jump by about 210,000 jobs compared to the increase of 185,000 jobs originally reported for the previous month.

A separate report from the Labor Department showed that labor productivity jumped by much more than previously estimated in the second quarter.

Late in the session, the Federal Reserve also released its Beige Book, which provides anecdotal evidence on economic conditions in the twelve Fed districts.

The Fed said reports from the twelve districts indicate economic activity continued expanding across most regions and sectors during the reporting period from July to mid-August.

In light of the uncertainty about the outlook for interest rates, analysts also highlighted the central bank's acknowledgment of several districts reporting increasing wage pressures caused by labor market tightening.

Sector News

Airline stocks showed a substantial move to the upside over the course of the trading day, driving the NYSE Arca Airline Index up by 3.6 percent.

Hawaiian Airlines parent Hawaiian Holdings (HA) and JetBlue (JBLU) turned in two of the airline sector's best performances.

Significant strength was also visible among biotechnology stocks, as reflected by the 3.6 percent gain posted by the NYSE Arca Biotechnology Index. Alkermes (ALKS), United Therapeutics (UTHR) and Incyte (INCY) posted standout gains.

Trucking, software, housing, and steel stocks also saw considerable strength on the day, moving higher along with most of the major sectors.

Meanwhile, gold stocks bucked the uptrend, dragging the NYSE Arca Gold Bugs Index down by 1.3 percent. The weakness in the sector came as gold for December delivery slid $6.20 to $1,133.60 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index slumped by 1.2 percent.

Meanwhile, the major European markets ended the day moderately higher. While the U.K.'s FTSE 100 Index advanced by 0.4 percent, the French CAC 40 Index and the German DAX Index both rose by 0.3 percent.

In the bond market, treasuries showed a lack of direction over the course of the session before closing modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 2.193 percent.

Looking Ahead

Economic data may continue to attract attention on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, international trade, and service sector activity.