Stocks Close Modestly Higher Following Choppy Trading Day - U.S. Commentary

(RTTNews) - Following the rally seen in the previous session, stocks fluctuated throughout the trading day on Wednesday. The major averages spent the bulk of the session bouncing back and forth across the unchanged line before closing modestly higher.

Benefiting from late-day strength, the major averages finished the session at their best closing levels in almost two months. The Dow edged up 34.24 points or 0.2 percent to 16,899.32, the Nasdaq rose 13.83 points or 0.3 percent to 4,703.42 and the S&P 500 climbed 8.10 points or 0.4 percent to 1,986.45.

The modestly higher close by stocks was partly due to an increase by the price of crude oil, which has recently been a key driver of the markets.

After advancing $0.65 to $34.40 a barrel on Tuesday, crude for April delivery rose $0.26 to a nearly two-month closing high of $34.66 a barrel.

The price of crude oil recovered after initially coming under pressure following the release of a report showing a sharp jump in weekly crude oil inventories.

Analysts noted the report from the Energy Information Administration also showed a decrease in U.S. oil production to 9.077 million barrels per day.

Earlier in the day, traders were reacting to the release of upbeat private sector employment data from payroll processor ADP.

ADP said private sector employment jumped by 214,000 jobs in February compared to economist estimates for an increase of about 185,000 jobs.

At the same time, the report showed a downward revision to the job growth in January, with the revised data showing an increase of 193,000 jobs compared to the previously reported addition of 205,000 jobs.

Mark Zandi, chief economist of Moody's Analytics, said, "Despite the turmoil in the global financial markets, the American job machine remains in high gear."

"Energy and manufacturing remain blemishes on the job market, but other sectors continue to add strongly to payrolls," he added. "Full-employment is fast approaching."

Later in the day, the Federal Reserve released its Beige Book, a collection of anecdotal reports from the twelve Fed districts.

The Fed said the reports continued to indicate that economic activity expanded in most districts since the previous Beige Book.

Sector News

Steel stocks showed a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 7.7 percent. With the jump, the index reached its highest closing level in over three months.

Within the sector, U.S. Steel (X), Cliffs Natural Resources (CLF), and AK Steel (AKS) turned in some of the best performances.

Considerable strength was also visible among energy stocks, which benefited from the continued increase by the price of crude oil.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index soared by 6.4 percent, while the Philadelphia Oil Service Index and the NYSE Arca Oil & Gas Index shot up by 2.9 percent and 2.6 percent, respectively.

Gold stocks also saw significant strength on the day, resulting in a 3.4 percent gain by the NYSE Arca Gold Bugs Index. The strength in the sector came as gold for April delivery climbed $11 to $1,241.80 an ounce.

Electronic storage, airline, and banking stocks also showed notable moves to the upside, while weakness was visible among chemical stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific moved notably higher following the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 4.1 percent, while Hong Kong's Hang Seng Index jumped by 3.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index and the German DAX Index rose by 0.4 percent and 0.6 percent, respectively.

In the bond market, treasuries closed modestly lower, extending the steep drop seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.4 basis points to 1.848 percent.

Looking Ahead

Trading on Thursday may be impacted by reports on weekly jobless claims, factory orders, and service sector activity, although some traders may stay on the sidelines ahead of the closely watched monthly jobs report on Friday.