YAHOO [BRIEFING.COM]: Solid gains overseas and a smaller-than-expected weekly jobless claims count helped stocks start the session on a strong note, but sellers applied pressure in early afternoon action. Near-term technical support provided a springboard so stocks could reclaim some of their gains, but the rebound faded into the close.

Initial strength stemmed from strong gains overseas, excluding the Shanghai Composite (-1.4%). Japan's Nikkei advanced 0.8% and Hong Kong's Hang Seng climbed 0.4%, while Germany's DAX advanced 0.9%, France's CAC climbed 1.2%, and Britain's FTSE finished with a 1.2% gain. Little was made of news that the Bank of England kept its target interest rate at 0.5%, as expected, but news that the trade deficit for the United Kingdom grew to record levels in July put pressure on the British pound. The pound pared its loss to finish just 0.2% below the greenback, though.

Initial jobless claims for the week ended September 4 totaled 451,000, which is down 27,000 week-over-week and less than the 470,000 claims that had been expected, on average, among economists polled by Briefing.com. Continuing claims came in at 4.48 million, but that was a greater tally than the 4.45 million that had been widely expected. Continuing claims were essentially unchanged week-over-week.

As for other data, the U.S. trade deficit for July improved to $42.8 billion from $49.8 billion. It was widely expected to come in at $47.3 billion.

The generally positive data and the strength of overseas markets motivated morning participants to send stocks to a gain of little more than 1%, but the S&P 500 was unable to push past the 1110 line.

Stocks spent a couple of hours drifting along session highs, before news that Deutsche Bank (DB 59.99, -1.97) may issue stock to raise capital induced selling. The S&P 500 saw its gain more than halved, but near-term support at the 1102 line kept the stock market from extending its slide. Support there helped stocks rebound, but the bounce lost momentum shortly ahead of the close.

Though the Deustche Bank headline should not come as a surprise, given lingering concerns about the health of European banks and that new regulatory requirements are expected with the release of Basel III, it was enough to cut into the financial sector. Financial stocks saw a 2% gain more than halved before they settled with a 1.2% gain.

Part of the sector's resilience is owed to positive momentum among domestic bank stocks. Their strength in recent sessions has the KBW Bank Index up about 9% since setting a 2010 intraday low just seven sessions ago.

In contrast to continued gains among bank stocks, the winning streak among steel stocks was snapped with a 1.6% loss. Prior to this session's slide, steel stocks in the S&P 500 had climbed in six straight sessions for a cumulative gain of nearly 12%. Weakness among steel stocks this session undercut the materials sector, which finished with a 0.3% loss. It was the only major sector that failed to stage a gain.

Though the broader market lost some of its direction into the close, it still held on for its sixth gain in seven sessions. Participation in that time has been paltry, however. In fact, trading volume on the NYSE has failed to break 1 billion shares in each of the past five sessions.

Strength among stocks continues to weigh on Treasuries. Lackluster results from an auction of 30-year Bonds could not change that. The auction drew a bid-to-cover of 2.7 and dollar demand of $35.5 billion. The indirect bidder participation rate was 36.1%. An average of the past six auctions produced a bid-to-cover of 2.8, dollar demand of $39.0 billion, and indirect bidder participation of 35.4%.

Grains were the largest advancing sector today, posting a 1.8% advance, led higher by a 3.8% move in Dec wheat futures, which settled at $7.38 per bushel.

Oct crude oil shed 0.6% to settle at $74.25 per barrel after giving back all of its morning gains. A pull back in the equity markets, as well as a bounce in the dollar index, pushed crude oil lower. Oct natural gas shed 0.9% to end at $3.78 per MMBtu. It sold off, following inventory data, to put in session lows at $3.703, but bounced off those lows to recoup most of its losses.

Dec gold ended lower by 0.7% to $1250.90 per ounce, while Dec silver shed 0.9% to settle at $19.86 per ounce. Both metals sold off shortly after the open of the equity markets and were unsuccessful in attempting to retrace their respective sell-offs.

Advancing Sectors: Financials (+1.2%), Telecom (+1.2%), Health Care (+1.2%), Utilities (+0.7%), Consumer Staples (+0.3%), Tech (+0.2%), Energy (+0.2%), Industrials (+0.1%), Consumer Discretionary (+0.1%)
Declining Sectors: Materials (-0.3%)DJ30 +28.23 NASDAQ +7.33 NQ100 +0.3% R2K +0.1% SP400 +0.2% SP500 +5.31 NASDAQ Adv/Vol/Dec 1385/1.17 bln/1182 NYSE Adv/Vol/Dec 1862/837 mln/1133