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Major Averages Hovering Firmly In Positive Territory - U.S. Commentary
4/16/2018 11:57 AM

After moving to the upside early in the session, stocks remain mostly positive in mid-day trading on Monday. With the upward move on the day, the major averages are adding to the strong gains posted last week.

Currently, the major averages are hovering firmly in positive territory. The Dow is up 180.56 points or 0.7 percent at 24,540.70, the Nasdaq is up 30.91 points or 0.4 percent at 7,137.56 and the S&P 500 is up 15.99 points or 0.6 percent at 2,672.29.

The early strength on Wall Street partly reflected a positive reaction to earnings news from financial giant Bank of America (BAC), which reported first quarter earnings that beat analyst estimates on strong loan growth.

Positive sentiment was also generated by a report from the Commerce Department showing stronger than expected retail sales growth in the month of March.

The report said retail sales climbed by 0.6 percent in March after edging down by 0.1 percent in February. Economists had expected retail sales to rise by 0.4 percent.

Excluding a rebound in auto sales, retail sales edged up by 0.2 percent in March, matching the uptick seen in the previous month as well as economist estimates.

"Overall, consumer spending has been disappointing in 1Q18, which is partially weather-related, but today's report suggests the slowdown was transitory," said James Knightley, Chief International Economist at ING.

"We remain upbeat for the coming months," he added. "Consumer confidence is high, supported by strong employment gains, rising wages and tax cuts. As such we look for a more positive contribution from consumer spending to overall GDP growth in 2Q18."

Meanwhile, traders have largely shrugged off a separate report from the National Association of Home Builders unexpectedly showing a modest drop in homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index edged down to 69 in April from 70 in March. Economists had expected the index to come in unchanged.

Sector News

Transportation stocks continue to see substantial strength in mid-day trading, with the Dow Jones Transportation Average jumping by 2.2 percent.

Trucking company J.B. Hunt Transport Services (JBHT) has led the transportation sector higher after reporting first quarter earnings growth on better than expected revenues.

Significant strength has also emerged among utilities stocks, as reflected by the 1.3 percent gain being posted by the Dow Jones Utilities Average.

Telecom, housing, and brokerage stocks are also seeing notable strength, while some weakness is visible among gold and biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index tumbled by 1.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index closed just below the unchanged line, the German DAX Index fell by 0.4 percent and the U.K.'s FTSE 100 Index slumped by 0.9 percent.

In the bond market, treasuries have climbed off their worst levels of the day but continue to see modest weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 2.845 percent.

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