YAHOO [BRIEFING.COM]: Recovering from losses last week, a bullish
bias has supported buying in recent sessions, which helped participants begin
Wednesday with strong gains. The upbeat tone was supported by continuing gains
among commodities and an early advance by financial stocks. However, stocks
began drifting lower midway through the session and ultimately closed with a
loss as participants turned against financials.
Early gains were helped along by investors that chased commodities
and materials stocks, which have benefited from the assumption that stronger
economic conditions in the back half of the year will rekindle commodity
demand. A weaker dollar has also helped bolster commodity prices.
The minutes from the April FOMC meeting indicated that participants
project a contraction for real GDP this year, and that committee members
believe the near-term economic outlook has weakened relative to the projections
made in January. However, a recovery in sales and production is still expected
to begin in the second half of this year.
With the dollar dropping more than 1% against a basket of major
foreign currencies, gold prices advanced 1.2% to settle pit trading at
seven-week high of $937.40 per ounce. Gold stocks like Newmont Mining (NEM 45.55, +1.98) provided leadership to
the materials sector (0.5%), which had spent most of the session trading with
gains exceeding 2%. Meanwhile, metals and mining stocks climbed 1.0%.
Oil prices built on the prior session's advance to register fresh
six-month intraday highs and closing highs. The advance was helped along by
bullish inventory data, which showed a 2.1 million barrel draw for the week
ending May 15 while a draw of 400,000 barrels was expected. Crude contracts
settled more than 3% higher just above $62 per barrel.
Financials proved to be a weak link during the session. The
financial sector spiked to a near 3% gain in the early going, helping drive the
broader market higher, but the move ultimately collapsed. Financial stocks
closed the session with a 2.4% loss.
Though Bank of America (BAC
11.50, +0.25) showed strength after announcing that it raised $13.5 billion
through a previously announced share offering following government stress
tests, banks were among the sectors weakest performers. The KBW Banking Index
slid 2.8%.
Consumer finance companies (-3.5%) also showed considerable
weakness amid continued concern that new rules are in order for credit card
companies. Following the Senate's approval yesterday, the House of
Representatives approved a bill imposing changes for the credit card industry.
Retailers had a seesaw session, which saw the sector trade with a
3.0% gain before settling with a 1.6% loss. Despite the disappointing finish, Target (TGT 42.95, +1.01) still logged an
impressive gain following better-than-expected earnings.
Dow component Hewlett-Packard (HPQ
34.63, -1.95) generated in-line earnings for its latest quarter and issued an
in-line forecast for the current quarter. The company's upside outlook for
fiscal 2009 wasn't enough to win it favor, though. The stock traded as a
laggard among tech issues (-0.7%). DJ30 -52.81 NASDAQ -6.70 NQ100 -0.3% R2K
-0.7% SP400 -0.6% SP500 -4.66 NASDAQ Adv/Vol/Dec
1239/2.23 bln/1453 NYSE Adv/Vol/Dec 1591/1.65 bln/1452