Stocks Seeing Further Upside Following Early Rally - U.S. Commentary

(RTTNews) - Stocks initially did not show much follow-through on their early rally, but additional buying interest has emerged in recent trading. The strong gains on the day have lifted the major averages further off the multi-month closing lows set on Wednesday.

The major averages have seen some further upside in the past few minutes, reaching new highs for the session. The Dow is up 228.16 points or 1.3 percent at 17,776.78, the Nasdaq is up 74.81 points or 1.5 percent at 4,997.21 and the S&P 500 is up 26.86 points or 1.3 percent at 2,078.17.

The initial strength on Wall Street partly reflected optimism Greece will finally be able to reach a new agreement with its creditors.

In a move seen as Greece's final bid to remain in the eurozone, the government offered a cash-for-reforms proposal to creditors that includes spending cuts and tax hikes in exchange for a third bailout.

Prime Minister Alexis Tsipras' request for at least 53.5 billion euros in bailout funds for the next three years will be presented in the Greek parliament for approval on Friday.

Eurozone finance ministers will meet on Saturday in Brussels to review the Greek request, followed by a summit of European leaders on Sunday to reach a final agreement.

"The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors," European Union President Donald Tusk told reporters. "Only then will we have a win-win situation."

Early buying interest was also generated by a continued rebound by the Chinese stock markets, as the Shanghai Composite Index jumped by 4.5 percent following yesterday's 5.8 percent gain.

Chinese stocks benefited from expectations the country's central bank will unveil further measures to support the market over the weekend.

The further upside seen in recent trading may be partly due to dovish comments by Boston Federal Reserve President Eric Rosengren.

Rosengren said it might be appropriate for the Fed to consider starting to raise interest rates later this year but said the central bank should wait to see how the Greek crisis unfolds.

Later in the day, trading could be impacted by remarks by Fed Chair Janet Yellen, who is due to deliver a speech about the U.S. economic outlook in Cleveland, Ohio.

Traders are likely to keep a close eye on Yellen's remarks for any indications regarding the timing of the first rate hike.

Sector News

Airline stocks continue to see substantial strength in mid-day trading, resulting in a 3.1 percent jump by the NYSE Arca Airline Index. With the gain, the index is climbing further off the eight-month closing low set on Wednesday.

Alaska Air Group (ALK) and Delta Air Lines (DAL) are turning in two of the sector's best performances, climbing by 5.6 percent and 4.2 percent, respectively.

Considerable strength has also emerged among pharmaceutical stocks, as reflected by the 2.2 percent gain being posted by the NYSE Arca Pharmaceutical Index. Sanofi (SNY) and Novo Nordisk (NVO) are posting standout gains.

Semiconductor stocks are also turning in a strong performance after coming under pressure in the previous session. The Philadelphia Oil Service Index is up by 1.6 percent, bouncing off its worst closing level in nearly eight months.

Tobacco, biotechnology, steel, and retail stocks are also seeing notable strength, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw continued strength on Friday. Hong Kong's Hang Seng Index surged up by 2.1 percent, and Australia's All Ordinaries Index rose by 0.4 percent. However, Japan's Nikkei 225 Index bucked the uptrend and fell 0.4 percent.

The major European markets are seeing considerable strength amid optimism about a Greek deal. While the U.K.'s FTSE 100 Index jumped by 1.4 percent, the German DAX Index and the French CAC 40 Index soared by 2.9 percent and 3.1 percent, respectively.

In the bond market, treasuries are extending the substantial pullback seen over the course of the previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.5 basis points at 2.376 percent.