Stocks Recover From Early Weakness To Close Slightly Higher - U.S. Commentary

(RTTNews) - After recovering from an early move to the downside, stocks turned in a relatively lackluster performance over the course of the trading session on Wednesday. The choppy trading extended the lack of direction seen in the previous session.

The major averages eventually ended the day just above the unchanged line. The Dow inched up 2.47 points or less than a tenth of a percent to 17,789.67, the Nasdaq ticked up 4.20 points or 0.1 percent to 4,952.25 and the S&P 500 edged up 2.37 points or 0.1 percent to 2,099.33.

The rebound from the initial weakness on Wall Street came following the release of an Institute for Supply Management report unexpectedly showing an uptick in the pace of growth in manufacturing activity in May.

The Institute for Supply Management said its purchasing managers index rose to 51.3 in May from 50.8 in April, with a reading above 50 indicating growth in the manufacturing sector.

The modest increase came as a surprise to economists, who had expected the index to edge down to a reading of 50.6.

"Based on the weakness in the early regional surveys, we had feared the ISM would drop back below the 50 mark," said Steve Murphy, U.S. economist at Capital Economics.

He added, "It's possible that the headwinds facing export-orientated manufacturers from the dollar's massive appreciation in late 2014 and early 2015 are slowly beginning to fade."

The better than expected U.S. manufacturing data offset concerns raised by the release of disappointing Chinese manufacturing data overnight.

Later in the day, the Federal Reserve released its Beige Book, a compilation of anecdotal evidence on economic conditions from the twelve Fed districts.

The Fed said information received from the twelve districts mostly described modest economic growth since the last Beige Book report in April.

Several districts noted that contacts had generally optimistic outlooks, the Fed said, with firms expecting growth either to continue at its current pace or to increase.

With regard to inflation, the central bank said wages grew modestly and price pressure grew slightly in most districts.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the relatively lackluster close by the broader markets.

Electronic storage stocks saw significant strength, however, with the NYSE Arca Electronic Storage Index jumping by 1.4 percent. The gain extended a recent uptrend by the index, which reached a nearly three-month closing high.

Quantum (QTM) and Violin Memory (VMEM) posted standout gains within the storage sector, surging up by 8.9 percent and 6 percent, respectively.

Natural gas and gold stocks also moved to the upside on the day, while some weakness was visible among oil service, trucking and telecom stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index dipped by 0.3 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index fell by 0.7 percent, the U.K.'s FTSE 100 Index and the German DAX Index both dropped by 0.6 percent.

In the bond market, treasuries turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.2 basis points to 1.846 percent.

Looking Ahead

Reports on private sector employment and weekly jobless claims may attract attention on Thursday, although trading activity is likely to be somewhat subdued ahead of the more closely watched jobs report due on Friday.