Wall Street Closes Higher But Well Off Best Levels

(RTTNews) - After moving sharply higher in morning trading, stocks were unable to hold onto their strong gains, steadily ceding ground over the course of Wednesday's session. Nonetheless, the major averages all finished in positive territory amid yet another low volume session.

With traders reacting positively to the latest batch of economic data, the Dow rose as much as 130 points in early trading, although it eventually ended the session up less than 60 points.

Early gains came on the heels of a report from the Institute for Supply Management, which said its index of activity in the manufacturing rose to 44.8 in June from 42.8 in May, although a reading below 50 indicates a contraction in the sector. The index came roughly in line with the expectations of economists, who forecast a reading of 44.6.

Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee said, "Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June."

Separately, housing industry group NAR said its pending home sales index rose 0.1 percent to 90.7 in May from an upwardly revised reading of 90.6 in April. Economists had been expecting the index to come in unchanged compared to the 90.3 originally reported for the previous month.

The day's optimism was mitigated by data from the U.S. Commerce Department revealing that construction spending fell 0.9 percent in May following a revised 0.6 percent increase in the previous month. Economists had expected construction spending to fall by 0.6 percent compared to the 0.8 percent increase that was originally reported for April.

Meanwhile, ADP said that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.

While employment fell by more than expected, the decrease in jobs marked the smallest drop since October of 2008, when employment fell by 352,000 jobs.

On the earnings front, General Mills (GIS | Quote | Chart | News | PowerRating) reported adjusted fourth-quarter net income of $0.86, up 18 percent from $0.73 in the same period last year. Analysts expected the firm to report earnings of $0.80 per share. Shares of the consumer foods manufacturer climbed by 3.9 percent on the session as traders reacted to the better-than-expected earnings.

The major averages continued to give back ground going into the close but were able to finish in the green by comfortable margins. The Dow closed up by 57.06 points or 0.7 percent at 8,504.06, the Nasdaq rose by 10.68 points or 0.6 percent to 1,845.72 and the S&P 500 advanced by 4.01 points or 0.4 percent to 923.33.

In overseas trading, stock markets across the Asia-Pacific region ended Wednesday's session on a mixed note. Japan's benchmark Nikkei 225 Index closed down by 0.2 percent, while South Korea's KOSPI Index closed up by 1.6 percent. Trading in Hong Kong was closed for the day.

Meanwhile, the major European markets closed notably higher, with the German DAX Index and French CAC 40 Index rising by 2 percent and 2.4 percent, respectively. The U.K.'s FTSE 100 Index also moved higher, advancing by 2.2 percent.

In the bond markets, treasuries closed modestly lower amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note finished at 3.544 percent, a jump of 2.1 basis points on the day.

Gold stocks saw strong gains on the day, offsetting some of their recent losses. The NYSE Arca Gold Bugs Index finished up by 4.4 percent after closing lower in the three previous sessions, although it remains well off the ten-month closing high it set in early June.

Specifically, shares of Kinross Gold (KGC | Quote | Chart | News | PowerRating) shot up by 6.8 percent on the day, reaching their best closing level in nearly a month while advancing further off a seven-week low set in late June.

The gains by gold stocks came as the price of the precious metal moved notably higher after showing a steep decline on Tuesday. After ending the previous session down $13.30 at $927.40 an ounce, gold for August delivery closed up $13.90 at $941.30 an ounce.

Healthcare provider stocks also turned in a strong performance, with the Morgan Stanley Healthcare Provider Index finishing by 2.8 percent. With the move, the index continued to move further off the nine-week closing low set late last month.

A number of tech segments saw comparable gains, with electronic storage, networking and semiconductor stocks all advancing on the session. The NYSE Arca Disk Drive Index and the NYSE Arca Networking Index both advanced by 1.7 percent, while the Philadelphia Semiconductor Index rose 1.5 percent.

Tobacco, health insurance and transportation stocks also rose on the day, reflecting the day's strength in a variety of sectors.

On the other hand, some weakness emerged in the biotechnology sector, as reflected by the 1.4 percent loss posted by the NYSE Arca Biotechnology Index. Modest weakness was also visible in the banking sector.

On Thursday, traders will focus on the employment situation report for the month of June from the Labor Department.

Economists expect the closely watched report to show of decrease of 365,000 jobs for the month compared to loss of 345,000 jobs seen in May. Further, the unemployment rate is expected to tick up to 9.6 percent from 9.4 percent. The report is due out at 8:30 a.m. ET.

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