(RTTNews) - Stocks are posting notable gains in early afternoon trading on Wednesday, boosted earlier by positive reactions to lukewarm economic reports ahead of today’s interest rate announcement from the Federal Reserve. The major averages are all in positive territory, although they have moved off of their best levels of the day.

This morning, the Institute for Supply Management said that activity in the service sector grew for the second consecutive month in October, although the pace of growth unexpectedly slowed compared to the previous month.

Earlier, Automatic Data Processing reported that private sector employment continued to decrease in October, with the pace of job losses slowing for the seventh consecutive month.

Shortly, traders will hone in on the latest interest rate announcement and economic commentary from the Federal Reserve, scheduled to be made public at 2:15 p.m. ET.

Although the Fed is widely expected to leave interest rates unchanged, traders will focus on any remarks regarding its exit strategy, the sustainability of the economic recovery as well as commentary on the downtrodden labor market.

While the major averages have pulled back well off their highs for the session, they currently remain firmly positive. The Dow is currently up 120.46 at 9,892.37, the Nasdaq is up 14.21 at 2,071.53 and the S&P 500 is up 10.75 at 1,056.16.

Sector News

Health insurance stocks continue to post strong gains in early afternoon trading, with the Morgan Stanley Healthcare Payor Index currently up 5.1 percent. The gain has propelled the index out of a recent trading range and lifted it to its best intraday level in over a month.

The strength in the sector comes as Republican victories in gubernatorial elections in Virginia and New Jersey have generated optimism that more liberal healthcare reforms will face increased opposition on Capitol Hill.

Semiconductor stocks are also showing notable strength, as reflected by the 1.5 percent gain being shown by the Philadelphia Semiconductor Index. The index is recovering from Tuesday’s two and a half month closing low.

Micron (MU) is turning in one of the sector’s best performances, advancing by 3.6 percent after ending the previous session at its worst closing level in three months.

Steel, pharmaceutical, housing, utility and natural gas stocks are also moving higher, reflecting the day’s broad based rally.

Meanwhile, trucking and electronic storage stocks have seen some further downside. The pullback in the trucking sector comes after Con-way (CNW) reported third quarter earnings that fell short of Wall Street estimates.

Stocks In The News

Rehabcare Group (RHB) is surging higher in early afternoon trading after the company reported third revenues that rose to $208.040 million from $181.350 million a year ago, exceeding analyst estimates. The company also agreed to acquire hospital operator Triumph Healthcare for about $570 million. The stock has shot up by 31 percent, reaching a three-month intraday high.

Tekelec (TKLC) is also moving higher after topping third quarter revenue estimates. The firm reported revenues for the third quarter at $114.9 million, exceeding the $108.12 million for the quarter forecast by analysts. The stock is currently up by 5.1 percent, moving further off of Monday’s six-month closing low.

On the other hand, Garmin Ltd. (GRMN) is slumping despite reporting better than expected third quarter results, as investors are concerned about the firm’s prospects following the entrance of Google (GOOG) into the navigation market. The stock has plunged by 11.7 percent, falling to a three-month intraday low earlier in the day.

In Focus: Economic News

As mentioned above, the ISM said its index of activity in the service sector edged down to 50.6 in October from 50.9 in September, with a reading above 50 indicating growth in the sector. The decrease by the index came as a surprise to economists, who had expected the index to rise to 51.5.

Separately, payroll processor ADP said non-farm private employment fell by 203,000 jobs in October following a revised decrease of 227,000 jobs in September. Economists had expected a loss of 198,000 jobs compared to the decrease of 254,000 jobs originally reported for the previous month.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed moderately higher on Wednesday. Japan’s benchmark Nikkei 225 Index rose by 0.4 percent, while Hong Kong’s Hang Seng Index climbed 1.8 percent.

The major European markets also moved notably higher on the day, with the U.K.’s FTSE 100 and the German DAX Index advancing 1.4 percent and 1.7 percent, respectively, while the French CAC 40 Index rose by 2.4 percent.

In the bond markets, treasuries are seeing modest weakness amid the strength on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.501 percent, posting a gain of 2.8 basis points.

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Posted in Categories: Economy, Releases.

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