U.S. Stocks Holding On To Strong Gains After Early Rally

Stocks moved sharply higher early in the session on Friday and continue to turn in a strong performance in afternoon trading. With the strong upward move, the major averages are regaining ground after trending lower over the past several sessions.

The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 566.44 points or 1.9 percent at 31,196.61, the Nasdaq is up 157.27 points or 1.4 percent at 11,408.45 and the S&P 500 is up 61.41 points or 1.6 percent at 3,851.79.

A positive reaction to the latest earnings news has contributed to the rally on Wall Street, as some traders look to pick up stocks at relatively reduced levels.

Shares of Citigroup (C) are moving sharply higher after the financial giant reported second quarter earnings that exceeded analyst estimates.

Health insurer and Dow component UnitedHealth (UNH) has also shown a strong move to the upside after reporting better than expected second quarter results and raising its full-year guidance.

Shares of Wells Fargo (WFC) have also moved notably higher even though the mortgage banking giant reported second quarter earnings that missed expectations.

Traders have also reacted positively to a slew of U.S. economic data, including a report from the Commerce Department showing retail sales jumped by more than expected in the month of June.

The Commerce Department said retail sales shot up by 1.0 percent in June after edging down by a revised 0.1 percent in May.

Economists had expected retail sales to increase by 0.8 percent compared to the 0.3 percent dip originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales still surged by 1.0 percent following a 0.6 percent increase in May. Ex-auto sales were expected to climb by 0.6 percent.

A separate report from the University of Michigan unexpectedly showed a modest improvement in U.S. consumer sentiment in the month of July.

The report showed the consumer sentiment index inched up to 51.1 in July from a record low 50.0 in June. The uptick surprised economists, who had expected the index to edge down to 49.9.

Inflation expectations also eased slightly, with one-year inflation expectations dipping to 5.2 percent in July from 5.3 in June and five-year inflation expectations slipping to 2.8 percent from 3.1 percent.

The Labor Department also released a report showing U.S. import prices crept up by much less than expected in the month of June, with a continued surge in prices for fuel imports partly offset by a decrease in prices for non-fuel imports.

Meanwhile, traders have largely shrugged off a report from the Federal Reserve showing an unexpected dip in U.S. industrial production in the month of June.

Sector News

Banking stocks continue to turn in some of the market’s best performances following recent weakness, with the KBW Bank Index spiking by 5.1 percent after ending the previous session at its lowest closing level in well over a year.

Substantial strength has also emerged among brokerage stocks, as reflected by the 2.7 percent surge by the NYSE Arca Broker/Dealer Index.

Healthcare stocks have also shown a significant move to the upside on the day, driving the Dow Jones U.S. Health Care Index up by 2.3 percent.

Retail, networking, transportation and chemical stocks are also seeing considerable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index slumped by 1.6 percent.

Meanwhile, the major European markets all showed substantial moves to the upside on the day. While the German DAX Index spiked 2.8 percent, the French CAC 40 Index surged by 2 percent and the U.K.’s FTSE 100 Index jumped by 1.7 percent.

In the bond market, treasuries are regaining ground following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.7 basis points at 2.923 percent.

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