Stocks showed a strong move to the upside at the start of trading on Wednesday but have given back some ground over the course of the morning. The major averages have pulled back well off their highs of the young session.
Currently, the major averages all remain in positive territory, although the Dow is up just 113.32 points or 0.3 percent at 34,411.05. The tech-heavy Nasdaq is up 200.80 points or 1.5 percent at 13,740.10 and the S&P 500 is up 38.28 points or 0.9 percent at 4,394.73.
Technology stocks helped lead the early rally on Wall Street, as reflected by the jump by the Nasdaq, which ended Tuesday’s trading at an eight-month closing low.
The early strength in the tech sector came amid a significant advance by shares of software giant Microsoft (MSFT).
Microsoft has pulled back well off its best levels but remains up by 3.6 percent after reporting better than expected fiscal second quarter results and providing upbeat guidance.
Buying interest has waned over the course of the morning as traders look ahead to the Federal Reserve’s monetary policy announcement this afternoon.
The Fed is widely expected to leave interest rates unchanged, but its accompanying statement could signal plans to raise rates as early as its next meeting in March.
CME Group’s FedWatch Tool is currently indicating an 88.2 percent chance that the Fed will raise interest rates by a quarter point in March.
On the U.S. economic front, a report released by the Commerce Department showed new home sales in the U.S. surged much more than expected to a nine-month high in the month of December.
The Commerce Department said new home sales soared by 11.9 percent to an annual rate of 811,000 in December after spiking by 11.7 percent to a revised rate of 725,000 in November.
Economists had expected new home sales to jump by 2.2 percent to a rate of 760,000 from the 744,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 873,000 last March.
Semiconductor stocks have shown a strong move back to the upside after moving sharply lower in the previous session, with the Philadelphia Semiconductor Index soaring by 2.9 percent.
The semiconductor index plunged by 3.7 percent on Tuesday, ending the session at its worst closing level in three months.
Chipmaker Texas Instruments (TXN) is posting a standout gain after reporting fourth quarter results that exceeded analyst estimates and providing upbeat guidance.
Microsoft has also helped lead a rally by software stocks, as reflected by the 2.7 percent spike by the Dow Jones U.S. Software Index. The index dropped to a seven-month closing low on Tuesday.
Brokerage, airline and computer hardware stocks are also seeing notable strength on the day, while gold stocks have moved to the downside along with the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index climbed by 0.7 percent.
Meanwhile, the major European markets have all moved sharply higher on the day. While the German DAX Index has surged by 2.1 percent, the French CAC 40 Index is up by 1.8 percent and the U.K.’s FTSE 100 Index is up by 1.5 percent.
In the bond market, treasuries are showing a lack of direction as traders await the Fed announcement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.776 percent.
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