Stocks Mostly Higher Amid Optimism About Fed Stimulus - U.S. Commentary

(RTTNews) - While buying interest has remained relatively subdued, stocks have moved mostly higher during trading on Friday. The gains on the day extend the recent upward move by the markets, with the Dow and the S&P 500 reaching new record highs.

The major averages have pulled back off their best levels in recent trading but are currently clinging to modest gains. The Dow is up 41.58 points or 0.3 percent at 15,917.80, the Nasdaq is up 1.33 points or less than 0.1 percent at 3,974.07 and the S&P 500 is up 1.17 points or 0.1 percent at 1,791.79.

The modest strength on Wall Street comes as traders continue to react positively to Janet Yellen's dovish comments at her confirmation hearing before the Senate Banking Committee on Thursday.

Yellen, the nominee to succeed Federal Reserve Chairman Ben Bernanke, defended the central bank's ultra-easy monetary policy and argued that unemployment remains too high for the Fed to consider significantly scaling back its asset purchase program.

"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen said.

A batch of largely weaker than expected economic data may have added to optimism that the Fed will leave its stimulus program intact for the foreseeable future.

Shortly before the start of trading, the Fed released a report showing an unexpected drop in industrial production in the month of October.

The report said industrial production edged down by 0.1 percent in October after climbing by 0.7 percent in September. Economists had expected production to inch up by 0.1 percent.

Commenting on the report, Rob Carnell, chief international economist at ING, said the headline appears worse than the underlying picture.

"Most of the softness was concentrated in utilities and mining, in particular natural gas extraction, where on-going price softness seems to have weighed on extraction activity and production has been feeble for some months," Carnell said.

A separate report from the New York Fed showed an unexpected contraction in regional manufacturing activity in November, while the Labor Department released a report showing a bigger than expected drop in import prices in October.

Sector News

While many of the major sectors are showing only modest moves, biotechnology stocks have shown a strong move to the upside on the day. The NYSE Arca Biotechnology Index has advanced by 1.5 percent and is currently on pace to end the session at its best closing level in over a month.

BioMarin (BMRN) has helped to lead the biotech sector higher, with the biopharmaceutical company up by 7.1 percent after French regulators granted temporary authorization for sales of Vimizim for the treatment of Morquio A Syndrome.

Notable strength is also visible among networking stocks, which are regaining some ground after ending the previous session sharply lower. The NYSE Arca Networking Index is up by 1 percent, partly offsetting yesterday's 2.3 percent loss.

Telecom, steel, and banking stocks are also seeing some strength in mid-day trading, while electronic storage stocks have come under pressure on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable strength during trading on Friday. Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang Seng Index advanced by 1.7 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index and the German DAX Index both edged up by 0.2 percent.

In the bond market, treasuries have shown a lack of direction over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.709 percent.