Stocks Close Firmly Positive Following Early Rally - U.S. Commentary

(RTTNews) - Stocks showed a strong upward move in early trading on Friday and managed to hold onto the bulk of the gains throughout session. While buying interest waned after the open, the markets maintained a notably positive bias.

The major averages moved roughly sideways for much of the session following the initial rally. The Dow ended the day up 181.55 points or 1.1 percent at 16,247.22, the Nasdaq climbed 34.55 points or 0.8 percent to 4,279.95 and the S&P 500 jumped 17.70 points or 1 percent to 1,858.83.

The early strength on Wall Street was partly due to bargain hunting following last week's pullback, which dragged the major averages down to their lowest levels in almost a month.

Positive sentiment was also generated by the release of a report from the Federal Reserve showing a stronger than expected rebound in industrial production in the month of February.

The Fed said industrial production increased by 0.6 percent in February following a revised 0.2 percent drop in January. Economists had been expecting production to rise by about 0.2 percent.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "Assuming that the weather returns to seasonal norms, output will rise rapidly in the coming months."

"One risk is that the political events in Ukraine and the economic developments in China prompt an easing in overseas demand," he added. "But we're not convinced this will prevent industrial production from rising at a decent rate this year."

At the same time, traders largely shrugged off a separate report from the National Association of Home Builders showing a smaller than expected rebound by its reading on homebuilder confidence.

Traders also kept an eye on developments in Ukraine after the people of the Crimea region overwhelmingly voted to secede and become part of Russia.

President Barack Obama announced this morning that the U.S. is imposing sanctions on certain Russian government officials as well as Crimea-based separatist leaders.

Sector News

While most of the major sectors moved to the upside on the day, significant strength was visible among telecom stocks. Reflecting the strength in the telecom sector, the NYSE Arca Telecom Index surged up by 2.1 percent.

Cincinnati Bell (CBB) helped to lead the telecom sector higher, while Telephone & Data Systems (TDS) and Motorola Solutions (MSI) also posted standout gains.

Airline stocks also turned in a strong performance, driving the NYSE Arca Airline Index up by 1.7 percent. With the gain, the index moved back toward the nearly twelve-year closing high set earlier this month.

Computer hardware, banking, defense, and semiconductor stocks also saw considerable strength, reflecting broad based buying interest.

On the other hand, gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 3.7 percent. The weakness in the sector came as gold for April delivery fell $6.10 to $1,372.90 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index fell by 0.3 percent, while China's Shanghai Composite Index advanced by 1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.6 percent, the French CAC 40 Index and the German DAX Index jumped by 1.3 percent and 1.4 percent, respectively.

In the bond market, treasuries came under pressure after trending higher in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.4 basis points to 2.699 percent.

Looking Ahead

Trading on Tuesday could be impacted by the release of reports on housing starts and consumer price inflation, although activity may be somewhat subdued ahead of the Federal Reserve's monetary policy announcement on Wednesday.