(RTTNews) - Stocks are posting strong gains in mid-morning on Wednesday, as traders are reacting positively to tepid reports on private employment and service sector activity. The major averages are all in positive territory by substantial margins, partly offsetting their recent losses.

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

The headline index for 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.

Earlier, Automatic Data Processing, Inc. (ADP) reported that private sector employment continued to decrease in the month of October, although the pace of job losses slowed for the seventh consecutive month.

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.

Later today, the broader markets will focus 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.

The major averages have slowed their advance in recent trading and are holding near their best levels of the day. The Dow is currently up 133.91 at 9,905.82, the Nasdaq is up 21.73 at 2,079.05 and the S&P 500 is up 14.36 at 1,059.77.

Sector News

Health insurance stocks are seeing substantial strength in mid-morning, as more liberal healthcare reforms are likely to face increased opposition on Capitol Hill following Republican victories in gubernatorial elections in Virginia and New Jersey.

The strength in the health insurance sector is reflected by the 6.6 percent gain currently being shown by the Morgan Stanley Healthcare Payor Index. With the gain, the index has broken out of a recent trading range, reaching its best intraday level in over a month.

WellCare Health Plans (WCG) is helping to lead the sector higher, climbing by 10.4 percent after reporting stronger than expected third quarter earnings. The stock shot up to its best intraday price in over a year earlier in the session.

Housing and steel stocks are also moving sharply higher, with the Philadelphia Housing Sector Index and the NYSE Arca Steel Index up by 3.2 percent and 3 percent, respectively. The housing index is recovering from last week’s three-month closing low, while the steel index is extending its move away from a seven-week low set last week.

Airline, gold, semiconductor, pharmaceutical, banking, networking and defense stocks are also advancing, reflecting the day’s broad based strength. On the other hand, modest weakness is visible among electronic storage and trucking stocks.

Stocks Driven By Analyst Comments

Affymetrix (AFFX) is surging higher in mid-morning trading after being upgraded by Deutsche Bank from Sell to Hold. The stock has jumped by 7.8 percent, moving further off of Monday’s three and a half month closing low.

Shares of Gaylord Entertainment (GET) have also shown a strong upward move after Wells Fargo upgraded its rating on the hotel operator to Market Perform from Underperform. Gaylord is currently up 6.4 percent, moving further off the three-month closing low it set on Monday.

On the other hand, Avid Technology (AVID) is moving lower after being downgraded by JP Morgan Chase to Neutral from Overweight. The stock is currently sliding by 2.9 percent, hitting its worst intraday price in three and a half months at its lows of the session.

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 are also moving notably higher, with the U.K.’s FTSE 100 up by 1.4 percent, while the French CAC 40 Index and the German DAX Index are up by 2.4 percent and 2 percent, respectively.

In the bond markets, treasuries are seeing modest weakness amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.493 percent, posting a gain of 2.0 basis points.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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