Stock Ticker from 1 hr 38 min ago[BRIEFING.COM] There were two...

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1 hr 38 min ago
[BRIEFING.COM] There were two primary factors behind Wednesday's advance. First, the latest rise in the Consumer Price Index matched the market's expectations. Second, crude ended its two-day rebound and dropped sharply. The indices sustained solid gains all day, and broad-based buying took eight of the ten economic sectors higher.

With respect to the CPI data, the total rate increased a more than expected 0.7% last month. It's the core rate of CPI, which excludes food and energy, to which investors pay attention, and its 0.2% increase brought no surprise. Especially on the heels of last week's higher than expected rise in the Producer Price Index, the market appeared relieved by the in-line read. In our view, however, that data does not assuage inflation concerns. The data support arguments that core inflation is at the high end of what the Fed will tolerate, and do not alter expectations of further rate hikes. Nonetheless, the stock market interpreted the data with a bullish perspective. The Treasury market similarly took a bid from the in-line core read, and rate-sensitive areas of the stock market rallied. Banks surged, and strength in the thrifts and mortgage industry helped the Financial sector advance 1.9%. That leadership was the muscle behind today's market, as the sector accounts for more than 20% of the S&P.

Technology was also a strong source of support. The sector was an early laggard, but buyers took it out of the red and to a 0.9% gain. Semiconductors, office electronics, and communication equipment were the strongest pockets. The latter industry is one of our favorite areas across the tech board, and positive comments from Banc of America about its Q1 prospects help attract interest. The industrial bellwethers helped drive today's Dow, and took the Industrial sector up a supportive 1.0%.

The second catalyst was a sharp decline in energy prices, specifically in crude oil. Continued geopolitical tensions had helped spur crude's rebound over the prior two sessions, but the commodity gave back close to 3% today and finished at $61.01 per barrel. The energy price action was supportive for the broader market. Transportation-related stocks benefited, and the particularly energy price sensitive Consumer Discretionary sector also gained. General Motors (GM 21.20 -0.21) was a sore spot there, after Moody's cut its debt rating a further notch into junk territory, but wide-spread strength that ranged from homebuilding to footwear to apparel countered its effect. Gaming was another bright spot, due to Harrah's (HET 72.77 +0.41) earnings-induced rise.

Selling across the Energy sector was a separate effect of the energy price action. That area of the market declined 1.4%. Its loss was offset by eight others' gains, but still had somewhat of a capping effect on the indices' advances. On a separate but related note, reports today indicated that, after decades of negotiations, Alaska has reached an agreement with XOM, BP, and COP to build a $20 billion pipeline to transport natural gas from the North Slope to the rest of North America. Although that's good news for the producers, the focus rested upon today's price action, and those stocks did not advance. Telecommunications was the other lagging sector. Sprint Nextel (S 23.80 -1.13) was the culprit there. The company reported fourth quarter earnings that fell a penny shy of expectations, and its decline weighed upon the sector. Strength in Centurytel (CTL 36.42 +1.59), which was a result of its announced $1 billion share buyback program, was a mitigating factor.