YAHOO [BRIEFING.COM]: The major averages ended modestly lower with the S&P 500 shedding 0.3%.

The benchmark average saw an opening loss of 1.2% after Japan's Nikkei tumbled 7.3%. Japanese stocks sold off amid continued volatility in Japanese Government Bond futures as the 10-yr yield spiked almost 16 basis points to 1.002 before the Bank of Japan's JPY2 trillion liquidity injection caused yields to retrace their gains.

Adding insult to injury was news out of China where the HSBC Flash Manufacturing PMI (49.6 actual, 50.5 consensus, 50.4 prior) fell below 50 for the first time in seven months.

All ten sectors began the session with sharp losses before the daylong rebound helped some groups return to yesterday's closing levels.

The utilities sector was the weakest performer, ending lower by 0.8% after a morning flash crash in American Electric Power (AEP 48.28, -0.31) and NextEra Energy (NEE 78.22, -0.94) briefly wiped out more than $33 billion in combined market capitalization.

Meanwhile, other defensively-oriented sectors outperformed the broader market with the telecom space registering a gain.

Cyclical groups were mixed throughout the day as technology and materials made a brief appearance in positive territory.

In the tech sector, major components like Apple (AAPL 442.14, +0.79), Oracle (ORCL 34.23, +0.11), and Cisco Systems (CSCO 23.51, +0.17) held up relatively well while Hewlett-Packard (HPQ 24.86, +3.63) surged 17.2% following its earnings beat on below-consensus revenue. In addition, the computer company guided third quarter earnings above analyst expectations and raised its dividend 10.0% to $0.1452.

Elsewhere, the relative strength in chemical producers overshadowed the weakness of steelmakers as the materials sector ended little changed. Gold miners also outperformed as the yellow metal rose 1.8% to $1391.30 per troy ounce. However, copper fell 1.9% to $3.318 per pound as disappointing Chinese data weighed.

While the Dow and Nasdaq made a couple intraday appearances in positive territory, the S&P was kept from seeing green by the weakness in banks. The financial sector settled lower by 0.6% as most majors registered losses. However, Dow component American Express (AXP 74.69, +0.25) outperformed its peers to end with a gain of 0.3%.

Today's opening losses caused the CBOE Volatility Index (VIX 14.12, +0.30) to spike to 15.11 before the near-term volatility measure returned near session lows as the broader market climbed off its worst levels of the day.

After a one-week shock, the initial claims level dropped back below 350,000. The initial claims level fell to 340,000 for the week ending May 18 from an upwardly revised 363,000 (from 360,000) for the week ending May 11. The Briefing.com consensus expected the initial claims level to fall to 348,000.

Separately, new home sales increased 2.3% to 454,000 in April after a sizable upward revision for March to 444,000 (from 417,000). The Briefing.com consensus pegged new home sales at 425,000.

Inventory levels remain depressed. There is only a 4.1-month supply at current sales rates. During a normal environment, homebuilders try to maintain a 6-month supply. That means construction growth should accelerate from current levels.

Tomorrow, April durable orders and durable orders ex-transportation will be reported at 8:30 ET.DJ30 -12.67 NASDAQ -3.88 SP500 -4.84 NASDAQ Adv/Vol/Dec 1294/1.74 bln/1200 NYSE Adv/Vol/Dec 1251/814.1 mln/1753

3:30 pm :

• July crude oil traded in negative territory today following China's HSBC Flash Manufacturing PMI data that showed a first contractionary reading in seven months. The energy component dipped to a session low of $92.21 per barrel in morning action but managed to erase most of the earlier losses as prices rallied to a session high of $94.35 per barrel heading into the close. Crude oil settled just 0.1% lower at $94.14 per barrel.
• June natural gas opened floor trade in the red but popped into positive territory following inventory data that showed a build of 89 bcf when a build of 91-92 bcf was anticipated. It pulled-back slightly moments later but picked up momentum in afternoon action. It settled 1.9% higher at $4.26 per MMBtu, just below its session high of $4.27 per MMBtu.
• June gold rose for the first time in three sessions as a weaker dollar index and weak China's HSBC Flash Manufacturing PMI data helped support the yellow metal's advance. Although prices dipped to a session low of $1375.20 per ounce in late morning action, gold inched higher for the remainder of the session and settled with a 1.8% gain at $1391.70 per ounce.
• July silver spent most of today's pit trade in negative territory, touching a session low of $22.16 per ounce. It picked up momentum heading into afternoon action and managed to erase all of its earlier losses as it settled 0.1% higher at $22.50 per ounce.