U.S. Stocks Show Significant Turnaround After Seeing Early Weakness

(RTTNews) - Stocks came under pressure early in the session on Friday but staged a significant turnaround over the course of the trading day. The major averages climbed well off their lows of the session and into positive territory.

The major averages all moved to the upside as the day progressed, adding to the gains posted on Thursday. The Dow climbed 132.28 points or 0.4 percent to 32,237.53, the Nasdaq rose 36.56 points or 0.3 percent to 11,823.96 and the S&P 500 advanced 22.27 points or 0.6 percent to 3,970.99.

For the week, the Dow jumped by 1.2 percent, while the S&P 500 and the Nasdaq surged by 1.4 percent and 1.7 percent, respectively.

The early weakness on Wall Street came as renewed concerns about the health of the banking sector inspired some traders to cash in on yesterday's gains.

U.S.-listed shares of Deutsche Bank (DB) moved sharply lower in early trading amid a spike by the German lender's credit default swaps.

Credit Suisse (CS) and UBS Group (UBS) also came under pressure after a report from Bloomberg said they are among banks under scrutiny in a Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions.

UBS' state-backed acquisition of troubled rival Credit Suisse for 3 billion Swiss francs, or $3.2 billion, helped ease concerns about recent banking industry turmoil earlier in the week.

Selling pressure waned over the course of the session, however, as traders felt the banking concerns may have been overdone amid optimism the Federal Reserve is nearing the end of its tightening cycle.

"This rush to pessimism over everything in finance might be overdone as some companies are well positioned to weather this storm," said Edward Moya, senior market analyst at OANDA. "Good banks should survive this volatility, but developments over the next week will be key."

On the U.S. economic front, the Commerce Department released a report showing a continued slump in orders for transportation equipment led to an unexpected decrease in new orders for U.S. manufactured durable goods in the month of February.

The Commerce Department said durable goods orders slid by 1.0 percent in February after plummeting by a revised 5.0 percent in January.

Economists had expected durable goods orders to increase by 0.6 percent compared to the 4.5 percent plunge that had been reported for the previous month.

Excluding the steep drop in orders for transportation equipment, durable goods orders were unchanged in February after rising by 0.4 percent in January. Ex-transportation orders were expected to inch up by 0.2 percent.

Sector News

Interest rate-sensitive utilities and commercial real estate stocks moved sharply higher over the course of the session, driving the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index up by 3.2 percent and 2.6 percent, respectively.

A sharp increase by the price of natural gas also contributed to significant strength among natural gas stocks, with the NYSE Arca Natural Gas Index jumping by 1.9 percent.

Gold stocks also moved notably higher despite a pullback by the price of the precious metal, resulting in a 2.3 percent gain by the NYSE Arca Gold Bugs Index.

Healthcare and pharmaceutical stocks also showed strong moves to the upside, while semiconductor stocks gave back ground following Thursday's rally.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index edged down by 0.1 percent, while China's Shanghai Composite Index fell by 0.6 percent.

The major European markets also showed significant moves to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.3 percent, the French CAC 40 Index and the German DAX Index both tumbled by 1.7 percent.

In the bond market, treasuries gave back ground after an early rally but still closed modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 3.380 percent after hitting a six-month intraday low of 3.295 percent.

Looking Ahead

The economic calendar for next week is relatively quiet, although traders are likely to keep an eye on reports on consumer confidence, pending home sales and personal income and spending.