U.S. Stocks Seeing Modest Strength Following Last Week’s Pullback

Stocks have moved modestly higher in morning trading on Monday, regaining ground following the steep drop seen last week. The major averages have all moved to the upside, although buying interest has remained somewhat subdued.

Currently, the major averages are hovering in positive territory. The Dow is up 189.80 points or 0.6 percent at 33,666.26, the Nasdaq is up 24.46 points or 0.2 percent at 11,029.07 and the S&P 500 is up 12.56 points or 0.3 percent at 3,946.94.

The strength on Wall Street comes as traders look to pick up stocks at relatively reduced levels following the notable decline seen in the previous week.

Last week, the Dow tumbled by 2.8 percent, ending last Friday’s trading at its lowest closing level in a month, while the S&P 500 and the Nasdaq plunged by 3.4 percent and 4.0 percent, respectively.

Overall trading activity remains somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy decision on Wednesday.

While the Fed is widely expected to slow the pace of interest rate hikes to 50 basis points, traders have recently expressed concerns about how much further the Fed will need to raise rates in order to contain inflation.

Traders are likely to pay close attention to the Fed’s accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

Energy stocks are seeing substantial strength recent following recent weakness, with a rebound by the price of crude oil contributing to the strength in the sector.

With crude for January delivery surging $2.15 to $73.17 a barrel, the Philadelphia Oil Service Index is up by 3.0 percent, the NYSE Arca Oil Index is up by 1.9 percent and the NYSE Arca Natural Gas Index is up by 1.6 percent.

Considerable strength is also visible among transportation stocks, as reflected by the 1.3 percent gain being posted by the Dow Jones Transportation Average.

On the other hand, tobacco, gold and steel stocks have shown significant moves to the downside, partly offsetting the strength in the aforementioned sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index edged down by 0.2 percent, while Hong Kong’s Hang Seng Index slumped by 2.2 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has fallen by 0.4 percent, the German DAX Index and the French CAC 40 Index are both down by 0.5 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 3.571 percent after hitting a low of 3.521 percent.

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