Positive Reaction To Data Leads To Strength On Wall Street - U.S. Commentary

(RTTNews) - Stocks have moved notably higher during trading on Tuesday, with the upward move partly reflecting a positive reaction to a slew of U.S. economic data. The gains on the day have more than offset the pullback seen on Monday.

Currently, the major averages are posting strong gains, near their highs for the session. The Dow is up 170.13 points or 1 percent at 16,541.09, the Nasdaq is up 38.05 points or 0.8 percent at 4,843.81 and the S&P 500 is up 16.78 points or 0.9 percent at 1,969.81.

The strength on Wall Street comes as some weaker than expected economic data has provided support for the view that the Federal Reserve will leave interest rates unchanged later this week.

Before the start of trading, the Commerce Department released a report showing that U.S. retail sales rose slightly less than expected in August.

The report said retail sales edged up by 0.2 percent in August following an upwardly revised 0.7 percent increase in July. Economists had expected retail sales to rise by 0.3 percent.

Additionally, the New York Federal Reserve said its index of regional manufacturing activity continued to point to a notable contraction in the month of September.

The Fed also released a report showing a bigger than expected decrease in industrial production in the month of August.

The report said industrial production fell by 0.4 percent in August following an upwardly revised 0.9 percent increase in July. Production had been expected to dip by 0.2 percent.

Rob Carnell, chief international economist at ING, said, "All in all, weak, disappointing, and taken together with other data earlier today - retail sales and Empire manufacturing - nudges the argument in the direction of the FOMC doves."

"With only CPI left to come before the September 17th meeting, and that likely to be on the low side, the data dependent FOMC might find the pendulum swinging a little more to the 'no hike' side," he added.

The Fed is scheduled to begin its two-day monetary policy meeting on Wednesday, with the announcement of its decision due Thursday afternoon.

Sector News

Energy stocks have shown a strong move to the upside over the course of the session, moving higher along with the price of crude oil. Crude for October delivery is currently climbing $0.74 to $44.74 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Oil & Gas Index are up by 1.3 percent and 1.1 percent, respectively.

Significant strength is also visible among software stocks, as reflected by the 1.3 percent gain being posted by the Dow Jones Software Index. Industry giant Microsoft (MSFT) is turning in one of the sector's best performances.

Banking, railroad, and semiconductor stocks are also seeing notable strength, while most of the other major sectors are showing more modest upward moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday. Hong Kong's Hang Seng Index fell by 0.5 percent, while China's Shanghai Composite Index plunged by 3.5 percent. However, Japan's Nikkei 225 Index bucked the downtrend and rose by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index surged up by 1.1 percent, the U.K.'s FTSE 100 Index advanced by 0.9 percent and the German climbed by 0.6 percent.

In the bond market, treasuries have come under pressure after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.2 basis points at 2.222 percent.