U.S. Stocks Rebounding Following Yesterday’s Pullback

Stocks have moved mostly higher over the course of morning trading on Friday, partly offsetting the pullback seen in the previous session. The major averages have all moved to the upside, although the Dow has underperformed its counterparts.

Currently, the major averages are just off their highs of the session. The Dow is up 142.94 points or 0.4 percent at 33,958.84, while the Nasdaq is up 132.28 points or 1 percent at 13,950.69 and the S&P 500 is up 28.20 points or 0.7 percent at 4,163.18.

The rebound on Wall Street partly reflects the volatility seen over the past few sessions, which have seen the major averages show big swings back-and-forth.

After coming under pressure early in the week, stocks showed a strong move back to the upside during trading on Wednesday.

Stocks subsequently experienced choppy trading early on Thursday before pulling back sharply on reports of President Joe Biden’s plans to raise capital gains tax rates.

The major averages slid back toward the lower end of a recent trading range, potentially leading to the renewed buying interest seen this morning.

Optimism about the economic recovery has helped prop up the markets, although concerns about high valuations and surging coronavirus cases overseas have led to worries about the near-term outlook.

The Dow is underperforming the broader Nasdaq and S&P 500 due in part to a steep drop by shares of Intel (INTC), with the semiconductor giant tumbling by 6.3 percent.

The decline by Intel comes after the company reported better than expected first quarter results but provided guidance below analyst estimates.

Dow components American Express (AXP) and Honeywell (HON) have also moved to the downside despite reporting better than expected quarterly earnings.

In U.S. economic news, the Commerce Department released a report showing a substantial rebound in new home sales in the month of March.

The report showed new home sales skyrocketed by 20.7 percent to an annual rate of 1.021 million in March after plunging by 16.2 percent to a revised rate of 846,000 in February.

Economists had expected new home sales to spike by 14.3 percent to a rate of 886,000 from the 775,000 originally reported for the previous month.

With the rebound, new home sales soared from the eight-month low set in February to their highest level since August of 2006.

Airline stocks have moved sharply higher in morning trading, with the NYSE Arca Airline Index soaring by 2.5 percent. The index continues to rebound after falling a nearly two-month closing low on Tuesday.

Significant strength has also emerged among banking stocks, as reflected by the 2.4 percent jump by the KBW Bank Index.

Semiconductor stocks are also seeing considerable strength despite the drop by Intel, resulting in a 1.7 advance by the Philadelphia Semiconductor Index.

Oil service, brokerage and computer hardware stocks have also shown notable moves to the upside, while gold stocks are among the few groups bucking the uptrend.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index fell by 0.6 percent, while China’s Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets have climbed well off their worst levels but continue to see modest weakness. While the German DAX Index is down by 0.5 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.1 percent.

In the bond market, treasuries have turned 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 2.5 basis points at 1.579 percent.

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