Stocks Rebound Along With The Price Of Crude Oil - U.S. Commentary

(RTTNews) - Stocks showed a substantial turnaround over the course of the trading session on Wednesday after falling rather sharply early in the day. With the rebound, the major averages partly offset the steep loss posted in the previous session.

The major averages all ended the day in positive territory. The Dow rose 53.21 points or 0.3 percent to 16,484.99, the Nasdaq advanced 39.02 points or 0.9 percent to 4,542.61 and the S&P 500 climbed 8.53 points or 0.4 percent to 1,929.80.

The early weakness on Wall Street was partly due to a steep drop by the price of crude oil, which saw further downside following yesterday's decline.

Crude for April delivery fell as low as $30.56 a barrel after Saudi Oil Minister Ali al-Naimi ruled out a cut in the kingdom's oil production.

However, the price of crude oil showed a significant rebound following the release of the Energy Information Administration's report on oil inventories in the week ended February 19th.

While crude oil inventories rose roughly in line with economist estimates, the report also showed decreases in gasoline and distillate fuel inventories.

April crude climbed well off its worst levels of the session and eventually finished the day up by $0.28 at $32.15 a barrel.

Meanwhile, traders largely shrugged off a report from the Commerce Department showing a much bigger than expected pullback in new home sales in the month of January.

The Commerce Department said new home sales tumbled 9.2 percent to an annual rate of 494,000 in January after surging up 8.2 percent to a rate of 544,000 in December.

Economists had expected new home sales to show a much more modest decrease of about 4.4 percent to a rate of 520,000.

Among individual stocks, shares of Chesapeake Energy (CHK) moved sharply higher on the day after the oil and gas producer reported a narrower than expected fourth quarter loss.

Animation studio DreamWorks Animation (DWA) also posted a standout gain after reporting fourth quarter adjusted earnings and revenues that exceeded analyst estimates.

On the other hand, shares of Avis Budget Group (CAR) fell sharply after the car rental company reported better than expected fourth quarter earnings but provided disappointing full-year guidance.

Sector News

Networking stocks showed a strong move to the upside as the day progressed, driving the NYSE Arca Networking Index up by 3.1 percent. With the gain, the index reached its best closing level in well over a month.

Polycom (PLCM) and Ciena (CIEN) turned in two of the sector's best performances, climbing by 5 percent and 3.9 percent, respectively.

Significant strength also emerged among computer hardware stocks, as reflected by the 1.8 percent gain posted by the NYSE Arca Computer Hardware Index.

HP Inc. (HPQ) helped lead the hardware sector higher ahead of the release of its first quarter results after the close of today's trading.

Telecom stocks also turned in a strong performance on the day, driving the NYSE Arca Telecom Index up by 1.6 percent. The gain lifted the index to a nearly two-month closing high.

Natural gas, housing, semiconductor, and airline stocks also moved notably higher, contributing to the rebound by the broader markets.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw further downside during trading on Wednesday. Japan's Nikkei 225 Index dropped by 0.9 percent, while Hong Kong's Hang Seng Index slid by 1.2 percent.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index tumbled by 1.6 percent, the French CAC 40 Index and the German DAX Index plunged by 2 percent and 2.6 percent, respectively.

In the bond market, treasuries pulled back well off their early highs to end the session roughly flat. 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 a 1.742 percent after hitting a low of 1.649 percent.

Looking Ahead

While the direction of the price of crude oil is likely to remain in focus on Thursday, traders are also likely to keep an eye on reports on durable goods orders and weekly jobless claims.

On the earnings front, Anheuser-Busch InBev (BUD), Best Buy (BBY), Campbell Soup (CPB), and Sears Holdings (SHLD) are among the companies due to release their quarterly results before the start of trading on Thursday.