Stocks Give Back Ground But Remain Mostly Positive - U.S. Commentary

(RTTNews) - After moving notably higher early in the session, stocks have given back some ground over the course of the trading day on Wednesday. The major averages have pulled back well off their best levels of the day but remain in positive territory.

Currently, the major averages are holding on to moderate gains. The Dow is up 95.68 points or 0.5 percent at 17,728.79, the Nasdaq is up 25.73 points or 0.5 percent at 4,872.35 and the S&P 500 is up 10.47 points or 0.5 percent at 2,065.48.

The early strength on Wall Street partly reflected a continued positive reaction to yesterday's remarks by Federal Reserve Chair Janet Yellen, which were seen as dovish regarding the outlook for interest rates.

In a speech to the Economic Club of New York, Yellen said she considers it appropriate for the Fed to proceed cautiously in adjusting monetary policy given the risks to the economic outlook.

The speech largely offset a recent uptick in speculation that the Fed will raise interest rates at its next meeting toward the end of April.

Buying interest was also generated by a sharp increase by the price of crude oil, which rebounded following recent weakness.

However, the subsequent pullback by the markets comes as the price of oil has also pulled back well off its earlier highs.

Crude for May delivery is currently up just $0.21 at $38.49 a barrel after reaching an intraday high of $39.85 a barrel.

On the U.S. economic front, payroll processor ADP released a report before the start of trading showing slightly stronger than expected U.S. private sector job growth in the month of March.

ADP said private sector employment increased by 200,000 jobs in March after jumping by a downwardly revised 205,000 jobs in February. Economists had expected employment to climb by about 195,000 jobs.

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

Jay Morelock, an economist at FTN Financial, said, "After Chair Yellen dampened expectations of a Fed move in April, all eyes turn to Friday's employment report to gauge whether the Fed will lean toward June or push the next rate hike into the second half of the year."

Sector News

Despite the pullback by the broader markets, substantial strength remains visible among steel stocks. While the NYSE Arca Steel Index has pulled back off the five-month high set in early trading, it remains up by 2.5 percent.

Brazil's Gerdau (GBB) is posting a standout gain within the steel sector after Bank of America Merrill Lynch raised its rating on the stock to Buy from Underperform.

Banking stocks also continue to turn in a strong performance in mid-day trading, with the Dow Jones Banks Index climbing by 1.5 percent. The gain by the index comes after it closed lower for five consecutive sessions.

Airline, semiconductor, and railroad stocks also continue to see some strength on the day, although buying interest has waned from earlier in the session.

On the other hand, gold stocks have shown a significant move to the downside, dragging the NYSE Arca Gold Bugs Index down by 2.5 percent. The weakness in the sector comes as the price of gold is pulling back after yesterday's rally.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved higher on Wednesday. Hong Kong's Hang Seng Index and China's Shanghai Composite Index surged up by 2.2 percent and 2.8 percent, respectively. However, Japan's Nikkei 225 Index bucked the uptrend and slid by 1.3 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the French CAC 40 Index jumped by 1.8 percent, the U.K.'s FTSE 100 Index and the German DAX Index both spiked by 1.6 percent.

In the bond market, treasuries are giving back ground after ending the previous session notably higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3 basis points at 1.844 percent.