Stocks Pull Back Well Off Highs But Remain Positive - U.S. Commentary

(RTTNews) - After initially turning in a lackluster performance, stocks saw considerable volatility over the course of the trading session on Wednesday. The major averages showed a strong move to the upside in mid-day trading but pulled back well off their highs going into the close.

Despite the late-day pullback, the major averages ended the day in positive territory. The Dow edged up 42.67 points or 0.2 percent to 18,096.27, the Nasdaq rose 7.80 points or 0.2 percent to 4,948.13 and the S&P 500 inched up 1.60 points or 0.1 percent to 2,102.40.

While the Dow and the S&P 500 ended the session well off their best levels of the day, they still reached new multi-month closing highs.

The strength that emerged on Wall Street in mid-day trading was partly due to another substantial rebound by the price of crude oil.

After falling as low as $39.85 a barrel, crude oil for May delivery surged up $1.55 to $42.63 a barrel, its highest closing level since last November.

Speculation regarding another effort to freeze production contributed to the rebound by the price of oil, although Moscow denied reports of a meeting of major oil producers in Russia next month.

The price of oil also benefited from the release of a report from the Energy Information Administration showing a smaller than expected increase in crude oil inventories last week.

However, traders may have grown uncomfortable with the recent upward trend on Wall Street, leading to some profit taking going into the close.

Among individual stocks, shares of Yahoo (YHOO) moved notably higher after the online media giant reported slightly stronger than expected first quarter results.

Yahoo has recently been in focus as the company considers bids for its core operations, with Verizon (VZ) reportedly the leading contender.

Semiconductor giant Intel (INTC) also moved to the upside after reporting better than expected first quarter earnings but providing disappointing guidance.

In an effort to intensify its focus in high-growth areas, Intel also announced a restructuring initiative that will result in the reduction of up to 12,000 positions globally.

On the other hand, shares of Coca-Cola (KO) came under pressure after the beverage giant reported first quarter earnings that beat analyst estimates but on weaker than expected worldwide case volume.

Sector News

Many of the major sectors pulled back off their best levels going into the close, although significant strength remained visible among banking stocks. The Dow Jones Banks Index surged up by 1.7 percent to its best closing level in over three months.

Capital One (COF) and Bank of America (BAC) turned in two of the banking sector's best performances, jumping by 3.6 percent and 3.3 percent, respectively.

Significant strength also remained visible among computer hardware stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Computer Hardware Index. The index continued to regain ground after falling to its lowest closing level in well over a month last Friday.

Lexmark (LXK) led the hardware sector higher after the printer maker agreed to be acquired by Chinese investors for $3.6 billion in cash.

Steel, brokerage, and railroad stocks also saw notable strength at the close of trading, although they were well off their best levels.

On the other hand, substantial weakness emerged among utilities stocks, with the Dow Jones Utilities Average tumbling by 2.5 percent. NiSource (NI) and Con Ed (ED) posted notable losses.

Gold stocks also came under considerable selling pressure late in the day, dragging the NYSE Arca Gold Bugs Index down by 2.4 percent. The weakness in the sector came as the price of gold pulled back in electronic trading.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index dropped by 0.9 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index and the German DAX Index advanced by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries pulled back sharply after seeing modest strength early in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 7.1 basis points to 1.854 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the European Central Bank's latest monetary policy announcement, although the ECB is not expected to offer any major policy changes.

U.S. reports on weekly jobless claims, leading economic indicators, and Philadelphia-area manufacturing activity may also attract some attention.

On the earnings front, American Express (AXP), United Continental (UAL), and Yum! Brands (YUM) are among the companies releasing their quarterly results after the close of today's trading.

General Motors (GM), Travelers (TRV) and Verizon (VZ) are also due to release their results before the start of trading on Thursday.