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[BRIEFING.COM] Investors looking for bargains following recent market weakness looked past a surge in bond yields. Instead, they embraced upbeat corporate news, a narrowing trade deficit and finally, for the moment anyway, sidelined their pre-occupation with higher energy bills as oil prices fell from 7-month highs. Crude oil futures closed down 0.5% and below $69/bbl following a larger than expected build in weekly crude inventories to 8-yr highs.

It is worth noting, however, that even though the market showed some resilience in the face of a sell-off in Treasuries, as the stock market may have already priced in the specter of higher rates over the last few sessions, below average total volume indicates that there was little conviction behind today's recovery efforts as much of the institutional money headed for the exits early. Consolidation in bonds, fueled by worries that the Fed will go too far with its tightening efforts to keep inflation in check and data that showed the trade deficit in February narrowed more than economists anticipated, lifted the yield on the 10-yr note (-12/32 at 4.97%) toward its highest levels in nearly four years and within reach of 5.0%. Rising borrowing costs have contributed to our Neutral market view.

With regard to sector strength and weakness, Industrials provided the bulk of support behind Wednesday's recovery efforts. The sector got a huge boost from Boeing (BA 83.31 +2.74), which hit an all-time high after inking a $4.6 bln aircraft deal with China -- a move that plays into our Overweight rating on the sector -- as well as gains in transportation stocks that benefited from oil's pullback. Health Care was also a source of market support, getting a big lift from a rebound in HMOs and strength in biotech despite consolidation in one of the group's biggest names. Genentech (DNA 80.71 -0.99), which is not a member of the S&P 500 but is still influential nonetheless, beat expectations and raised its outlook; but disappointing Rituxan sales prompted investors to lock in recent gains.

Consumer Discretionary was also in focus following better than expected earnings and upside guidance from Circuit City (CC 26.68 +2.07) and amid positive commentary from General Motors' (GM 20.08 +0.86) Vice Chairman of Global Product Development, Robert Lutz, regarding GM's ongoing turnaround. However, weakness in retail, homebuilding, and a 5.9% drubbing in Harley-Davidson (HDI 49.83 -3.14), which matched analysts' expectations but issued a disappointing Q2 shipment outlook, kept the sector from closing in positive territory.

Energy turned in the day's worst performance as participants used a pullback in oil prices as an incentive to consolidate recent gains in explorers and drillers. The absence of leadership from Technology also prevented the market from moving more aggressively to the upside. Semiconductor benefited from an upgrade on KLA-Tencor (KLAC 46.54 +0.74), upbeat analyst commentary on Micron Technology (MU 15.34 +0.24) and a 2.8% surge in Advanced Micro Devices (AMD 35.29 +0.94) heading into its earnings report. We have an Overweight rating on Technology. However, the gains in the chip space and relative strength in networking, fueled in part by an analyst upgrade on Motorola (MOT 23.98 +0.41), a suggested holding in our Active Portfolio, was not enough to offset weakness in computer hardware and storage.
NYSE Adv/Dec 1651/1584...Nasdaq Adv/Dec 1653/1332