Overseas Rallies Contribute To Early Strength On Wall Street - U.S. Commentary

(RTTNews) - After showing a lack of direction throughout much of the previous session, stocks have moved sharply higher in early trading on Wednesday. The major averages have all shown strong moves to the upside after ending the previous session mixed.

Currently, the major averages are posting strong gains, just off their highs for the young session. The Dow is up 234.57 points or 1.5 percent at 16,283.70, the Nasdaq is up 96.75 points or 2.1 percent at 4,614.07 and the S&P 500 is up 31.20 points or 1.7 percent at 1,915.29.

The early strength on Wall Street is partly in reaction to rallies by stocks overseas, with most markets across Europe and the Asia-Pacific region seeing considerable strength on the day.

Traders have also reacted positively to a report from payroll processor ADP showing stronger than expected private sector job growth in the month of September.

The report said private sector employment jumped by 200,000 jobs in September following a downwardly revised increase of 186,000 jobs in August. Economists had expected an increase of about 190,000 jobs.

"Businesses with more than 1,000 employees contributed over half of the job gains in September, despite weakness in energy and manufacturing," said Ahu Yildirmaz, VP and head of the ADP Research Institute.

She added, "The largest companies appear to be starting to overcome the impacts of weak global demand and the high dollar, while the smallest companies may have pulled back as concerns about the resiliency of the U.S. economy grew and consumer confidence softened."

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

Meanwhile, traders have largely shrugged off a separate report from MNI Indicators showing an unexpected contraction in Chicago-area business activity in the month of September.

MNI Indicators said its Chicago business barometer tumbled to 48.7 in September from 54.4 in August, with a reading below 50 indicating a contraction.

Economists had been expecting the business barometer to show a much more modest decrease to a reading of 53.6, which would have still indicated growth.

Biotechnology stocks have shown a substantial move back to the upside after turning lower over the course of the previous session. The NYSE Arca Biotechnology Index has surged up by 4.5 percent, bouncing off a nine-month closing low.

Novavax (NVAX) has helped to lead the biotech sector higher after announcing positive top line data from a Phase I clinical trial of its RSV F-protein recombinant nanoparticle vaccine.

Computer hardware, semiconductor, energy, and internet stocks are also seeing significant strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region regained ground following yesterday's sell-off. Japan's Nikkei 225 Index soared by 2.7 percent, while Hong Kong's Hang Seng Index jumped by 1.4 percent.

The major European markets have also shown substantial moves to the upside on the day. While the French CAC 40 Index has surged up by 2.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index are up by 2.3 percent and 2.4 percent, respectively.

In the bond market, treasuries are seeing modest weakness after moving notably higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.5 basis points at 2.069 percent.