Stocks Give Back Ground But Remain Mostly Positive - U.S. Commentary

(RTTNews) - Stocks remain mostly positive in mid-day trading on Thursday, although buying interest has waned from earlier in the session. The Dow and the S&P 500 have given back some ground after reaching new record intraday highs in early trading.

The major averages have moved roughly sideways in recent trading, hovering in positive territory. The Dow is up 49.07 points or 0.3 percent at 17,127.35, the Nasdaq is up 18.11 points or 0.4 percent at 4,590.67 and the S&P 500 is up 6.30 points or 0.3 percent at 2,007.02.

The strength on Wall Street comes on the heels of a surprise European Central Bank decision to cut interest rates to record lows.

Following its monetary policy meeting, the ECB said it is lowering all three of its main interest rates by 10 basis points, reducing the benchmark rate to 0.05 percent.

ECB President Mario Draghi also said the bank plans to purchase asset-backed securities to boost the economy and combat the threat of deflation.

Traders are also digesting a slew of U.S. economic data, including a report from the Instituted for Supply Management showing an unexpected acceleration in the pace of service sector growth in the month of August.

The ISM said its non-manufacturing index climbed to 59.6 in August from 58.7 in July, with a reading above 50 indicating growth in the service sector.

The modest increase by the non-manufacturing index came as a surprise to economists, who had expected the index to dip to a reading of 57.5.

Before the start of trading, payroll processor ADP released a report showing another notable increase in U.S. private sector employment in the month of August, although the pace of job growth once again came in below economist estimates.

ADP said private sector employment rose by 204,000 jobs in August following a downwardly revised increase of 212,000 jobs in July. Economists had been expecting an increase of about 220,000 jobs.

A separate report from the Labor Department showed that first-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended August 30th.

Meanwhile, the Commerce Department released a report showing that the U.S. trade deficit unexpectedly came in slightly narrower in the month of July.

Sector News

Railroad stocks continue to see considerable strength in mid-day trading, with the Dow Jones Railroads Index up by 1.3 percent. With the gain, the index has reached a new record intraday high.

Greenbrier (GBX), Union Pacific (UNP) and American Railcar (ARII) are turning in some of the railroad sector's best performances.

Significant strength also remains visible among airline stocks, as reflected by the 1.3 percent gain being posted by the NYSE Arca Airline Index. The index reached a twelve-year high earlier in the session but has given back some ground since then.

Retail, housing, and trucking stocks are also seeing some strength on the day, while most of the other major sectors are showing only modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index dropped by 0.3 percent, while China's Shanghai Composite Index advanced by 0.8 percent.

Meanwhile, the major European markets all moved higher on the day. While the U.K.'s FTSE 100 Index edged up by 0.1 percent, the German DAX Index jumped by 1 percent and the French CAC 40 Index surged up by 1.7 percent.

In the bond market, treasuries have moved back to the downside after turning higher over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.4 basis points at 2.444 percent.