Optimism About ECB Leads To Higher Close On Wall Street - U.S. Commentary

(RTTNews) - Stocks fluctuated over the course of the trading day on Wednesday but managed to end the session mostly higher. With the gains, the major averages closed in positive territory for the third consecutive session, although they remain well off their recent highs.

The major averages moved roughly sideways going into the close, hovering above the unchanged line. The Dow edged up 39.05 points or 0.2 percent at 17,554.28, the Nasdaq rose 12.58 points or 0.3 percent to 4,667.42 and the S&P 500 climbed 9.57 points or 0.5 percent to 2,032.12.

Optimism about tomorrow's monetary policy announcement from the European Central Bank contributed to the higher close on Wall Street, with the bank expected to unveil additional stimulus.

Reports indicated that the ECB's Executive Board has proposed purchasing 50 billion euros worth of bonds per month until the end of 2016.

Jonathan Loynes, Chief European Economist at Capital Economics, said the reports suggest the ECB is set to announce a bigger quantitative easing program than has generally been anticipated

"Of course, we don't know if these reports will prove to be correct," Loynes said. "If they don't, they have further raised the scope for a major disappointment tomorrow."

He added, "Even if they are right though, there are reasons to remain cautious about QE's likely effectiveness."

A notable increase by the price of crude oil also generated some buying interest, as the direction of oil prices has recently been a key driver of the markets.

Crude for March delivery ended the day up $1.31 at $47.78 a barrel after tumbling $2.66 to $46.47 a barrel on Tuesday.

Among individual stocks, shares of Netflix (NFLX) moved sharply higher after the video streaming company reported better than expected fourth quarter earnings and raised its full-year earnings guidance.

Insurance giant UnitedHealth (UNH) also turned in a strong performance after reporting fourth quarter results that exceeded analyst estimates.

On the other hand, shares of IBM (IBM) moved to the downside after the tech giant reported better than expected adjusted fourth quarter earnings but provided disappointing guidance.

Sector News

Benefiting from the rebound by the price of crude oil, energy stocks turned in some of the market's best performances on the day.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index surged up by 2.7 percent, the Philadelphia Oil Service Index jumped by 2.5 percent and the NYSE Arca Oil & Gas Index shot up by 2.1 percent.

Steel stocks also moved sharply higher over the course of the trading session, driving the NYSE Arca Steel Index up by 1.8 percent. With the gain, the index climbed further off the five-year closing low set last Thursday.

Semiconductor, utilities, and retail stocks also saw notable strength on the day, while weakness among biotechnology and gold stocks helped to limit the upside for the markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Hong Kong's Hang Seng Index jumped by 1.7 percent, while China's Shanghai Composite Index soared by 4.7 percent. However, Japan's Nikkei 225 Index bucked the uptrend and fell by 0.5 percent.

Meanwhile, the major European markets all moved to the upside over the course of the day. While the U.K.'s FTSE 100 Index surged up by 1.6 percent, the French CAC 40 Index advanced by 0.9 percent and the German DAX Index rose by 0.4 percent.

In the bond market, treasuries pulled back firmly into the red amid expectations of further European stimulus. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.6 basis points to 1.853 percent.

Looking Ahead

The ECB announcement is likely to be in spotlight on Thursday, overshadowing the Labor Department's weekly jobless claims report.

On the earnings front, American Express (AXP) and eBay (EBAY) are among the companies releasing their quarterly results after the close of today's trading.

Additionally, Travelers (TRV), United Continental (UAL), and Verizon (VZ) are among those due to report their results before the start of trading on Thursday.