Stocks Showing Significant Rebound After Yesterday's Pullback - U.S. Commentary

(RTTNews) - After moving sharply lower over the course of the previous session, stocks showed a significant rebound during trading on Wednesday. The markets continued to perform well following the release of the minutes of the latest Federal Reserve meeting.

The major averages closed firmly in positive territory, near their best levels of the day. The Dow jumped 158.75 points or 1 percent to 16,533.06, the Nasdaq advanced 34.65 points or 0.9 percent to 4,131.54 and the S&P 500 climbed 15.20 points or 0.8 percent at 1,888.03.

The strength on Wall Street was partly due to bargain hunting following the pullback seen on Tuesday, with the Dow bouncing well off the nearly one-month closing low set in the previous session.

Buying interest was also seen in reaction to the minutes of the Fed's latest monetary policy meeting even though they did not provide much new information.

Traders seemed to react positively to the fact that the minutes did not provide any indication that an interest rate hike is imminent.

At the same time, the Fed said meeting participants discussed issues associated with the eventual normalization of the stance and conduct of monetary policy.

The minutes also noted that a staff presentation outlined several approaches to raising short-term interest rates when it becomes appropriate.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "With the removal of QE still firmly on track, the FOMC minutes from the April meeting seemed more about a discussion about the logistics of how short term interest rates will eventually rise rather than giving any clues to when this might occur."

"The timing we know is 'data dependent' and won't be discussed in earnest until the fall when QE is scheduled to be done," he added.

Among individual stocks, shares of Citi Trends (CTRN) moved sharply higher on the day after the urban fashion apparel retailer reported better than expected first quarter earnings.

Jeweler Tiffany (TIF) also turned in a strong performance after reporting better than expected first quarter results and raising its full-year earnings guidance.

On the other hand, shares of PetSmart (PETM) saw significant weakness after the pet supplies retailer lowered its outlook for full-year earnings and sales.

Sector News

Tobacco stocks showed a substantial move to the upside late in the trading day, driving the NYSE Arca Tobacco Index up by 2.2 percent. Despite the gain, the index remained stuck in a recent trading range.

Lorillard (LO) helped lead the tobacco sector higher, surging up by 10.4 percent after a report from Reuters indicated that Reynolds American (RAI) is in advanced talks to acquire the cigarette maker.

Considerable strength was also visible among brokerage stocks, which rebounded after seeing significant weakness on Tuesday. Reflecting the strength in the sector, the NYSE Arca Broker/Dealer Index climbed 1.3 percent.

Internet, railroad, and energy stocks also moved notably higher on the day, while most of the other major sectors showed more modest moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index edged down by 0.2 percent, while China's Shanghai Composite Index advanced by 0.8 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index climbed by 0.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index rose by 0.4 percent and 0.3 percent, respectively.

In the bond market, treasuries came under pressure in early trading and remained stuck in the red throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 2.537 percent.

Looking Ahead

Following several quiet days, the economic calendar finally picks up on Thursday with the release of reports on weekly jobless claims and existing home sales.

Trading could also be impacted by reaction to earnings news from companies such as Best Buy (BBY), Sears (SHLD), and Dollar Tree (DLTR), which are due to report their quarterly results before the start of trading on Thursday.