Stocks Extend Yesterday's Rally Amid Continued Fed Reaction - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Thursday, adding to the strong gains posted in the previous session. With the upward move, the tech-heavy Nasdaq once again reached a new record closing high.

The major averages ended the day firmly in positive territory but off their highs for the session. The Dow rose 98.76 points or 0.5 percent to 18,392.46, the Nasdaq advanced 44.34 points or 0.8 percent to 5,339.52 and the S&P 500 climbed 14.06 points or 0.7 percent to 2,177.18.

The strength on Wall Street came as traders continued to react positively to the Federal Reserve's monetary policy announcement Wednesday afternoon.

While the Fed left interest rates unchanged as expected, the central bank signaled that a rate hike is likely before the end of the year.

The statement from the Fed said the case for an increase in the federal funds rate has strengthened but that most members decided to wait for additional data for "the time being."

Reflecting division within the committee, Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren voted to raise rates by a quarter point.

The Fed is widely expected to leave rates unchanged at the November meeting due to the subsequent president election, but many analysts are targeting the December meeting for a rate hike.

Meanwhile, traders largely shrugged off some disappointing U.S. economic data, with the reports potentially seen as old news in light of the forward-looking nature of the Fed.

The National Association of Realtors released a report this morning showing an unexpected decrease in existing home sales in the month of August.

The report said existing home sales slid 0.9 percent to an annual rate of 5.33 million in August after tumbling by 3.4 percent to a downwardly revised 5.38 million in July.

A separate report from the Conference Board showed that its index of leading economic indicators edged down by 0.2 percent in August compared to expectations for a 0.1 percent uptick.

Sector News

Despite the disappointing housing data, housing stocks showed a strong move to the upside on the day. The Philadelphia Housing Sector Index surged up by 2.1 percent, continuing to regain ground after ending Tuesday's trading at its lowest closing level in well over two months.

Forest products company Weyerhaeuser (WY) posted a standout gain after Goldman Sachs initiated coverage of the stock with a Buy rating.

Considerable strength was also visible among telecom stocks, as reflected by the 1.8 percent gain posted by the NYSE Arca North American Telecom Index. The index climbed further off the two-month closing low it set on Tuesday.

FairPoint Communications (FRP) and Frontier Communications (FTR) turned in two of the telecom sector's best performances on the day.

Commercial real estate, tobacco, networking and oil service stocks also saw notable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside on Thursday, although the Japanese markets were closed for a holiday. Hong Kong's Hang Seng Index rose by 0.4 percent, while Australia's All Ordinaries Index climbed by 0.7 percent.

The major European markets moved sharply higher on the day. While the U.K.'s FTSE 100 Index jumped by 1.1 percent, the German DAX Index and the French CAC 40 Index both soared by 2.3 percent.

In the bond, treasuries extended the upward move seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.6 basis points to 1.632 percent.

Looking Ahead

A lack of major U.S. economic data may lead to light trading activity on Friday, although investors are likely to keep an eye on remarks by some Fed officials.