Stocks Close Slightly Higher But Well Off Best Levels - U.S. Commentary

(RTTNews) - After moving to the upside in morning trading on Wednesday, stocks gave back some ground in the afternoon but managed to close slightly higher. The choppy trading extended the lackluster performance seen in the previous session.

The major averages ended the day in positive territory but well off their highs for the session. The Dow edged up 18.75 points or 0.1 percent to 16,198.41, the Nasdaq ticked up 4.48 points or 0.1 percent to 4,292.06 and the S&P 500 inched up 0.04 points or less than a tenth of a percent to 1,845.16.

The strength seen in morning trading came following the release of a report from the Commerce Department showing that new home sales unexpectedly rebounded in the month of January.

The report said new home sales jumped 9.6 percent to a seasonally adjusted annual rate of 468,000 in January after falling 3.8 percent to a revised 427,000 in December. Economists had expected sales to drop to an annual rate of 400,000.

With the unexpected increase, new home sales rose to their highest level since hitting an annual rate of 477,000 in July of 2008.

Buying interest was also generated by a positive reaction to earnings news from retailers such as Target (TGT) and Lowe's (LOW).

While Target reported fourth quarter earnings that fell sharply year-over-year due to the massive data breach over the holidays, the discount retailer still beat analyst estimates.

Home improvement retailer Lowe's reported fourth quarter earnings that matched analyst estimates and said its board has authorized the repurchase of an additional $5 billion of the company's common stock.

Nonetheless, stocks did not see much follow-through on the upward move and subsequently pulled back well off their best levels of the day.

Uncertainty about the near-term outlook for the markets may have contributed to the pullback, as the S&P 500 once again failed to hold above the record closing high set last month.

Sector News

Many of the major sectors ended the day showing only modest moves, although housing stocks saw considerable strength on the heels of the new home sales data. The Philadelphia Housing Sector Index surged up 2.2 percent to a six-year closing high.

Retail stocks also turned in a strong performance, resulting in a 1.2 percent gain by the Dow Jones Retail Index. With the gain, the index ended the session at its best closing level in over a month.

Meanwhile, natural gas stocks saw significant weakness, resulting in a 1.9 percent drop by the NYSE Arca Natural Gas Index. Chesapeake Energy (CHK) helped lead the sector lower after reporting weaker than expected fourth quarter earnings.

Gold stocks also came under pressure on the day, moving lower along with the price of the previous metal. With gold for April delivery sliding $14.70 to $1,328 an ounce, the NYSE Arca Gold Bugs Index fell by 1.5 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dropped by 0.5 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.

Meanwhile, the major European markets all moved lower on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index both ended the day down by 0.4 percent.

In the bond market, treasuries moved to the upside amid a positive reaction to the Treasury Department's five-year note auction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 2.673 percent.

Looking Ahead

Economic data may impact trading on Thursday, with traders likely to keep an eye on the release of reports on durable goods orders and weekly jobless claims.

Additionally, Federal Reserve Chair Janet Yellen is scheduled to testify before the Senate Banking Committee after her originally scheduled appearance before the committee was postponed due to a snowstorm in Washington.

On the earnings front, Sears (SHLD), Best Buy (BBY), and Wendy's (WEN) are among the companies due to report their quarterly results before the start of trading on Thursday.