Stocks Seeing Further Upside Following Early Upward Move - U.S. Commentary

(RTTNews) - After moving moderately higher in early trading, stocks have seen some further upside over the course of the trading session on Tuesday. The gains on the day are extending the upward trend shown by the markets over the past few sessions.

Currently, the major averages are at their highs for the session. The Dow is up 66.73 points or 0.4 percent at 18,044.41, the Nasdaq is up 37.52 points or 0.7 percent at 5,109.03 and the S&P 500 is up 9.21 points or 0.4 percent at 2,108.81.

The continued strength on Wall Street comes even though the Commerce Department released a report before the start of trading showing an unexpected drop in retail sales in the month of June.

The report said retail sales fell by 0.3 percent in June compared to economist estimates for an increase of about 0.3 percent. The unexpected drop came following a downwardly revised 1.0 percent jump in May.

Excluding a steep drop in auto sales, retail sales still edged down by 0.1 percent in June compared to a 0.8 percent increase in May. Ex-auto sales had been expected to climb by 0.5 percent.

The buying interest seen following the report may reflect speculation that the data will lead the Federal Reserve to delay its first interest rate hike.

Analysts also suggested that the unexpected drop in sales is not as bad as it appears in light of the jump in sales seen in the previous month.

James Knightley, an economist at ING Bank, said, "It is possible that the early Memorial Day holiday has boosted sales in May at the expense of June."

Traders may also be continuing to react positively to news that Greece finally reached an agreement with its international creditors over the weekend.

While analysts have noted that Greece still has some big hurdles to clear to finalize a new bailout, traders can now turn their attention to the latest U.S. economic data and earnings news.

Sector News

Oil service stocks continue to turn in some of the market's best performances in mid-day trading, with the Philadelphia Oil Service Index up by 2.1 percent. The index continues to regain ground after ending last Wednesday's trading at its worst closing level in well over three months.

The strength among oil service stocks comes as news of an agreement on Iran's nuclear program has generated some optimism about increased oil drilling business in the Islamic republic.

Considerable strength has also emerged among biotechnology stocks, as reflected by the 2.1 percent gain being posted by the NYSE Arca Biotechnology Index. With the gain, the index is back within striking distance of the record closing high set last month.

Semiconductor stocks are also seeing some strength on the day, with Micron (MU) leading the sector higher amid reports China's Tsinghua Unigroup is preparing a $23 billion bid for the memory chip maker.

Natural gas and internet stocks have also moved notably higher, while steel stocks are giving back some ground after rising sharply on Monday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index shot up by 1.5 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved higher over the course of the trading day. While the French CAC 40 Index advanced by 0.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index rose by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries are seeing modest strength after trending lower over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.2 basis points at 2.408 percent.