U.S. Stocks Pull Back Off Best Levels But Remain Mostly Positive

(RTTNews) - After showing a strong move to the upside early in the session on Thursday, stocks have given back some ground over the course of the trading day. The major averages have pulled back well off their highs of the session but remain in positive territory.

Currently, the Dow is up 156.70 points or 0.4 percent at 37,239.70, the Nasdaq is up 110.14 points or 0.8 percent at 14,888.08 and the S&P 500 is up 24.79 points or 0.5 percent at 4,723.14.

The initial strength on Wall Street came as some traders saw the sharp pullback seen late in the previous session as a buying opportunity amid expectations the markets will see further upside.

Positive sentiment was also generated in reaction to revised Commerce Department data showing consumer prices increased by less than previously estimated in the third quarter.

The Commerce Department said the surge in consumer prices in the third quarter was downwardly revised to 2.6 percent from 2.8 percent.

The increase in core consumer prices, which exclude food and energy prices, was also downwardly revised to 2.0 percent from 2.3 percent.

The revised inflation data was included in a report showing the spike in gross domestic product in the third quarter was downwardly revised to 4.9 percent from 5.2 percent. Economists had expected the pace of GDP growth to be unrevised.

"While third quarter GDP was revised slightly lower, the bigger news was the downward revisions to both headline and core PCE inflation, both of which showed faster progress toward the Fed's 2% target," said Michael Pearce, Lead US Economist at Oxford Economics.

He added, "That helps vindicate the Fed's dovish shift in messaging, and, if sustained, opens the door to earlier rate cuts than our current September forecast."

However, buying interest has waned somewhat over the course of the session, as traders look ahead to the release of some key U.S. economic data on Friday.

Traders are likely to keep a close eye on the Commerce Department's report on personal income and spending, which includes readings on inflation said to be preferred by the Federal Reserve.

Sector News

Airline stocks continue to see substantial strength in afternoon trading, driving the NYSE Arca Airline Index up by 2.1 percent. The index is on pace to end the session at its best closing level in over four months.

Significant strength also remains visible among semiconductor stocks, as reflected by the 2.1 percent jump by the Philadelphia Semiconductor Index.

Micron Technology (MU) has led sector higher, with the chipmaker surging by 7.1 percent after reporting better than expected fiscal first quarter results and providing upbeat fiscal second quarter guidance.

Steel, biotechnology and transportation stocks are also seeing notable strength, while tobacco stocks have come under pressure over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday, although Chinese stocks bucked the downtrend. While China's Shanghai Composite Index climbed by 0.6 percent, Japan's Nikkei 225 Index tumbled by 1.6 percent and South Korea's Kospi slid by 0.6 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index edged down by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index both dipped by 0.3 percent.

In the bond market, treasuries have moved lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.2 basis points at 3.899 percent.