Stocks Close Roughly Flat After Recovering From Initial Drop - U.S. Commentary

(RTTNews) - Stocks staged a significant recovery after coming under pressure in early trading on Wednesday but were unable to sustain the upward move. The major averages subsequently ended the day on opposite sides of the unchanged line.

While the tech-heavy Nasdaq managed to climb into positive territory, the Dow and the S&P 500 posted modest losses. The Nasdaq rose 14.58 points or 0.3 percent to 4,675.14, while the Dow edged down 2.70 points or less than 0.1 percent to 17,612.20 and the S&P 500 dipped 1.43 points or 0.1 percent to 2,038.25.

The initial weakness on Wall Street was partly due to profit taking following recent strength, with the Dow and the S&P 500 pulling back off yesterday's record closing highs.

News of major fines levied against several big-name banks for currency market manipulation also weighed on the markets.

UBS (UBS), HSBC (HSBC), Citigroup (C), JP Morgan Chase (JPM), and Royal Bank of Scotland (RBS) have been fined a total of $3.4 billion by U.S. and U.K. regulators.

Disappointing guidance from Macy's (M) also generated some negative sentiment, as the retail giant cut its full-year outlook despite reporting better than expected third quarter earnings.

Selling pressure waned not long after the open, however, with traders seemingly reluctant to miss out on any further upside for the markets.

The subsequent recovery may have reflected uncertainty ahead of the release of key economic data in the coming days, including reports on weekly jobless claims, retail sales, and consumer sentiment.

Among individual stocks, shares of Susquehanna Bancshares (SUSQ) moved sharply higher on the day after the regional bank agreed to be acquired by BB&T (BBT) for $2.5 billion in cash and stock.

Clothing and accessories company Fossil (FOSL) also posted a strong gain after reporting better than expected third quarter results. The company also announced a $1 billion stock buyback.

On the other hand, shares of SeaWorld Entertainment (SEAS) came under pressure after the theme park operator reported third quarter earnings that came in below analyst estimates.

Sector News

Reflecting the lackluster close by the broader markets, most of the major sectors ended the day showing only modest moves.

Significant weakness remained visible among utilities stocks, however, with the Dow Jones Utilities Average tumbling by 2 percent. With the drop, the average pulled back further off the record closing high it set a week ago.

Exelon (EXC) and PSEG (PEG turned in two of the utilities sector's worst performances, falling by 3.5 percent and 3 percent, respectively.

Natural gas stocks also came under pressure over the course of the trading day, dragging the NYSE Arca Natural Gas Index down by 1.4 percent. The weakness in the sector came as natural gas for December delivery slid $0.062 to $4.185 per million BTUs.

Oil and commercial real estate stocks also saw some weakness on the day, while strength was visible among trucking and telecom stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region extended a recent trend and turned in another mixed performance on Wednesday. Japan's Nikkei 225 Index rose by 0.4 percent, while Australia's All Ordinaries Index slumped by 0.9 percent.

Meanwhile, the major European markets all moved lower on the day. While the U.K.'s FTSE 100 Index dipped by 0.3 percent, the French CAC 40 Index and the German DAX Index tumbled by 1.5 percent and 1.7 percent, respectively.

In the bond market, treasuries ended the day nearly flat after failing to sustain an early upward move. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.359 percent.

Looking Ahead

Earnings news may attract some attention on Thursday, with Cisco Systems (CSCO), J.C. Penney (JCP), and NetApp (NTAP) releasing their quarterly results after the close of today's trading.

Wal-Mart (WMT), Kohl's (KSS), Tyco (TYC), and Viacom (VIA) are also due to report their results before the start of trading on Thursday.

Following several quiet days on the U.S. economic front, the Labor Department is also scheduled to release its weekly jobless claims report.