Stocks Remain Mostly Positive Following Initial Upward Move - U.S. Commentary

(RTTNews) - After moving sharply higher at the open, stocks continue to see notable strength in mid-day trading on Wednesday. Buying interest has waned from earlier in the session, however, leading the major averages to pull back well off their highs.

Currently, the major averages remain firmly in positive territory. The Dow is up 114.55 points or 0.7 percent at 17,734.06, the Nasdaq is up 26.18 points or 0.5 percent at 5,013.05 and the S&P 500 is up 11.99 points or 0.6 percent at 2,075.10.

The initial strength on Wall Street came as the latest developments regarding the Greek debt crisis led to some optimism about a potential deal.

While Greece failed to make a 1.55 billion euro payment to the International Monetary Fund, Greek Prime Minister Alexis Tsipras sent a letter indicating he will accept the demands made by the country's creditors.

The two-page letter, obtained by the Financial Times, was sent to the heads of the IMF, the European Commission, and the European Central Bank.

Eurozone finance ministers are reportedly due to hold a conference call later in the day, although German Chancellor Angela Merkel has said any new talks will have to wait until after the Greek referendum on Sunday.

In an address to the nation, Tsipras called on Greeks to vote "no" in the referendum, which he claimed is not an up or down vote on Greece's membership in the eurozone.

On the U.S. economic front, payroll processor ADP released a report before the start of trading showing private sector employment increased by more than expected in the month of June.

ADP said employment in the private sector jumped by 237,000 jobs in June following an upwardly revised increase of 203,000 jobs in May. Economists had expected an increase of about 220,000 jobs.

Additionally, the Institute for Supply Management released a report showing that its manufacturing index rose by slightly more than expected in June.

The ISM said its purchasing managers index rose to 53.5 in June from 52.8 in May, with a reading above 50 indicating an increase in manufacturing activity. Economists had expected the index to edge up to 53.2.

Sector News

Despite the strength being shown by the broader markets, most of the major sectors are showing only modest moves on the day.

Brokerage stocks are turning in a strong performance, however, with the NYSE Arca Broker/Dealer Index up by 1.1 percent. The index continues to regain ground after ending Monday's trading at its worst closing level in almost a month.

Nomura Holdings (NMR) has helped to lead the brokerage sector higher, with the financial services provider jumping by 3 percent.

Pharmaceutical and banking stocks are also seeing some strength in mid-day trading, although buying interest has waned from earlier in the session.

On the other hand, oil service stocks have moved sharply lower on the day, dragging the Philadelphia Oil Service Index down by 2.6 percent. With the drop, the index has fallen to a three-month low.

The weakness among oil service stocks comes amid a sharp drop by the price of crude oil, with crude for August delivery plunging $1.86 to $57.61 a barrel.

Natural gas, gold, and electronic storage stocks have also moved to the downside, partly offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent. However, China's Shanghai Composite Index bucked the uptrend and plunged 5.2 percent.

Meanwhile, the major European markets all moved sharply higher on the day. While the U.K.'s FTSE 100 Index surged up by 1.3 percent, the French CAC 40 Index and the German DAX Index soared by 1.9 percent and 2.2 percent, respectively.

In the bond market, treasuries have shown a notable move to the downside after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.9 basis points at 2.404 percent.