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

(RTTNews) - After moving notably higher earlier in the session, stocks are giving back some ground in mid-day trading on Wednesday. The major averages have pulled back well off their highs for the session, although the tech-heavy Nasdaq continues to post a substantial gain.

Currently, the Nasdaq is outperforming its counterparts by a wide margin. While the Nasdaq is up 55.03 points or 1.1 percent at 5,160.58, the Dow is up 35.31 points or 0.2 percent at 17,586.00 and the S&P 500 is up 11.26 points or 0.5 percent at 2,104.58.

The early strength on Wall Street partly reflected easing concerns about the outlook for interest rates after a report from payroll processor ADP showed that the pace of private sector job growth slowed by more than expected in July.

ADP said private sector employment climbed by 185,000 jobs in July following a downwardly revised increase of 229,000 jobs in June. Economists had expected an increase of about 215,000 jobs.

The Commerce Department also released a separate report showing that the U.S. trade deficit widened more than expected in June.

Positive sentiment was also generated by comments from Federal Reserve Governor Jerome Powell, who told CNBC he has not yet made up his mind on whether rates should be raised next month.

"Nothing has been decided and I haven't made any decisions of what I would support and certainly the committee hasn't," Powell said. "I'm going to be very focused on the data from now until the meeting, particularly the labor market data."

Friday morning, the Labor Department is scheduled to release its closely watched monthly employment report, which includes both public and private sector jobs.

Meanwhile, the Institute for Supply Management released a report showing that service sector activity expanded at a significantly faster rate in the month of July.

The ISM said its non-manufacturing index jumped to 60.3 in July from 56.0 in June, with a reading above 50 indicating growth in the service sector. Economists had expected the index inch up to 56.2.

Sector News

Technology stocks continue to see considerable strength in mid-day trading, as reflected by the strong gain being posted by the tech-heavy Nasdaq.

Within the tech sector, networking stocks are turning in a particularly strong performance, resulting in a 2.1 percent jump by the NYSE Arca Networking Index. The gain has lifted the index to its best intraday level in well over a month.

Internet stocks are also seeing notable strength, with Priceline (PCLN) leading the way higher after reporting better than expected second quarter results.

Gains by biotechnology, semiconductor, and electronic storage stocks are also helping to keep the Nasdaq firmly in positive territory, while many of the other major sectors have given back ground.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while China's Shanghai Composite Index dropped by 1.7 percent.

Meanwhile, the major European markets all moved higher on the day. While the U.K.'s FTSE 100 Index advanced by 1 percent, the German DAX Index and the French CAC 40 Index jumped by 1.6 percent and 1.7 percent, respectively.

In the bond market, treasuries have come under pressure, pulling back further off their recent highs. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.6 basis points at 2.277 percent.