Stocks In Rally Mode In Mid-Morning TradingStocks are notably higher in mid-morning trading on Tuesday, bouncing back from yesterday's weakness after a better than expected reading on service sector activity and central bank decisions in Japan and Australia.
The major averages have seen further upside in recent trading, rising to new highs for the session. TheDow is up 124.12 points or 1.2 percent at 10,875.39, the Nasdaq is up 38.45 points or 1.6 percent at 2,382.97 and the S&P 500 is up 15.89 points or 1.4 percent at 1,152.92.
Activity in the service sector expanded for the ninth consecutive month in September, according to a report released by the Institute for Supply Management a short time ago, with the data also showing that the pace of growth accelerated by much more than anticipated.
The ISM said its index of activity in the service sector rose to 53.2 in September from 51.5 in August, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to edge up to a reading of 51.8.
Earlier, the Bank of Japan cut its benchmark interest rate to almost zero as it seeks to revive a faltering recovery. Under pressure from the government, the BOJ cut rates to 0.0-0.1 percent from 0.1 percent.
The central bank also unveiled a new asset purchase program to buy up government bonds and boost liquidity in the deflation-wracked economy.
As much as 5 trillion yen, or $60 billion, has been earmarked by the central bank to purchase government bonds, treasury bills and corporate bonds in an effort to weaken the local currency and improve liquidity in the world's third largest economy.
Separately, the Reserve Bank of Australia surprised analysts by holding its interest rate at 4.50 percent, contrary to expectations of a 25-basis point rate hike. However, the central bank cautioned about further hikes before the end of the year.
In corporate news, fertilizer producer Mosaic Co. (MOS) said that its first quarter profit nearly tripled from last year, mainly due to significantly higher potash sales and improved phosphate selling prices. However, the company's quarterly earnings came in below analysts' expectations.
Women's apparel retailer Talbots Inc. (TLB) reiterated its earnings outlook for the third quarter and fiscal year 2010 but lowered its forecast for sales growth for both periods. The company also projects 75 to 100 store closings by the end of 2013 as part of its three-year strategic plan.
Meanwhile, drugstore chain Walgreen Co. (WAG) announced that its comparable store sales in September saw 0.4 percent growth, while it also reported a 5.3 percent increase in total sales.
Sector NewsGold stocks are among the strongest performers in the early going, lifting the NYSE Arca Gold Bugs Index up by 3.3 percent. The upward move has lifted the index to an all-time intraday high.
The strength in the sector comes as the price of gold also moved to a fresh record high of $1,333.80 an ounce earlier. Gold is currently up by $15.10 at $1,331.90 an ounce.
Trucking stocks are also posting strong gains, with the Dow Jones Trucking Index up by 2.3 percent and on pace for its best close in two months.
Sizable gains are also being shown by banking stocks, driving the KBW Bank Index up by 1.8 percent, although it remains in a range as it recovers from recent weakness.
Oil service, railroad and internet stocks are also sharply higher, evident of the day's widespread buying.
Stocks Driven By Analyst CommentsMEMC Electronic Materials Inc. (WFR) is notably higher after being upgraded at RBC Capital Markets from Underperform to Sector Perform. The broker also raised its target from $9.50 to $12. The stock is up by 4 percent and on pace for a five-month closing high.
P.F. Chang's China Bistro, Inc. (PFCB) is also on the upside after an upgrade at Argus from Hold to Buy. Shares are currently up by 2.5 percent, poised for their best close in four and a half years.
On the other hand, Blackrock (BLK) is under pressure after being downgraded by analysts at Goldman Sachs from Buy to Neutral based on recent valuation. The stock is posting a 1.3 percent loss but remains in a range near last month's more than three-month closing high.
Overseas, stock markets in the Asia-Pacific region turned in a mixed performance on the central bank news. Japan's benchmark Nikkei 225 Index rose by 1.5 percent, while Australia's All Ordinaries Index fell by 0.4 percent.
Meanwhile, the major European markets are all up by varied margins, extending their earlier gains. TheU.K.'s FTSE 100 Index and the German DAX Index are both up by 1.1 percent, while the French CAC 40 Index is up by 2 percent.
In the bond markets, treasuries have inched higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.469 percent, posting a loss of 1 basis point.