31st Oct 2014 16:00
WASHINGTON (Alliance News) - After moving sharply higher at the open, stocks have continued to perform well throughout the trading day on Friday. The gains on the day are extending the upward trend seen over the past two weeks, lifting the Dow to a new record high.
The major averages have pulled back off their best levels in recent trading but remain firmly positive. The Dow is up 162.47 points or 0.9% at 17,357.89, the Nasdaq is up 55.12 points or 1.2% at 4,621.25 and the S&P 500 is up 19.01 points or 1% at 2,013.66.
The strength on Wall Street largely reflects a positive reaction to news of further monetary policy easing by the Bank of Japan.
By a 5-4 vote, the Bank of Japan's Monetary Policy Board unexpectedly decided to raise the monetary base at an annual pace of about 80 trillion yen. The bank previously targeted an increase of about 60 to 70 trillion yen.
"So much for the end of QE," said Julian Jessop, Chief Global Economist at Capital Economics. "The Bank of Japan's announcement today that it is stepping up its asset purchases is a timely reminder that not everyone has to follow the Fed."
"We would be wary of speculation that an outflow of Japanese money will lift bond markets elsewhere," he added. "Nonetheless, further QE in Japan should help to support equity prices worldwide and especially in the euro-zone if expectations build that the ECB will follow with full-blown QE of its own."
Another upbeat reading on US consumer sentiment has also generated some positive sentiment, with a report from Thomson Reuters and the University of Michigan showing that sentiment improved by more than previously estimated in October.
The report said the final reading on the consumer sentiment index for October came in at 86.9 compared to the mid-month reading of 86.4. Economists had expected the index to be unrevised.
With the unexpected upward revision, the index rose from the final September reading of 84.6 to reach its highest level since July of 2007.
The Conference Board's consumer confidence index also came in better than expected earlier in the week, generating some optimism about the holiday shopping season.
Meanwhile, traders have largely shrugged off a separate Commerce Department report showing an unexpected drop in US personal spending in the month of September.
Sector News
While most of the major sectors have moved to the upside on the day, semiconductor stocks are posting particularly strong gains. The Philadelphia Semiconductor Index has surged up by 3.5%, reaching its best intraday level in a month.
Microchip Technology (MCHP) has helped to lead the semiconductor sector higher, jumping 6.6% after reporting second quarter earnings that matched analyst estimates.
Significant strength is also visible among brokerage stocks, as reflected by the 2.3% gain being posted by the NYSE Arca Broker/Dealer Index. Nomura Holdings (NMR) is posting a standout gain after being upgraded from Sell to Hold by TheStreet Ratings.
Internet stocks are also see considerable strength in mid-day trading, with the Dow Jones Internet Index climbing by 2.2%. Expedia (EXPE) is up by 5% after reporting better than expected third quarter results.
Airline, computer hardware, chemical, and defense stocks are also moving notably higher, reflecting broad based buying interest.
However, gold stocks are bucking the uptrend amid a sharp drop by the price of the precious metal. With gold for December delivery tumbling USD33.20 to USD1,165.40 an ounce, the NYSE Arca Gold Bugs Index has plummeted by 5.1%.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region saw considerable strength on Friday following the Bank of Japan news. Japan's Nikkei 225 Index soared by 4.8%, while Hong Kong's Hang Seng Index jumped by 1.3%.
The major European markets have also shown notable moves to the upside on the day. While the UK's FTSE 100 Index has advanced by 1.1%, the German DAX Index and the French CAC 40 Index are surging up by 2.3% and 2.5%, respectively.
In the bond market, treasuries have come under pressure, offsetting the modest strength seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.4 basis points at 2.339%.
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