[BRIEFING.COM] For a second straight session, the stock market was extremely volatile as divergent views as to whether or not a bottom might be forming continued to dictate trading. On a positive note, it was the bulls' turn to swoop in at the end of the day to determine the day's outcome, which lifted the indices toward session highs before pulling back to close with only modest gains.
With little in the way of corporate news, investors finally got some economic data to analyze after a two-day hiatus. First out was a larger than expected 4.8% drop in April durable goods new orders. The weakness sparked some chatter that the report might help the Fed hold off on raising rates at the June FOMC meeting. That consideration helped offset early angst related to a report of a potential bird flu outbreak, which incited weakness in overseas markets. The World Health Organization was quick to indicate, though, that it has found "no evidence" that bird flu is more contagious in humans.
Next up was an unexpected 4.9% rise in April new home sales to 1.198 mln -- the highest level this year. While it remains to been seen how policy makers will view the surprisingly strong housing data, as evidenced by a pullback in Treasuries that carried into the close, the report provided some relief that the housing market, which has bolstered consumer spending for years via mortgage refinancing and home equity withdrawals, isn't about to roll over and prompt a material slowdown in economic activity.
Fresh off hitting a new three-year low two days ago was, Microsoft (MSFT 23.50 +0.71) was among the biggest bargains to be found Wednesday, surging 3.1%. General Motors (GM 26.51 +2.03) -- the first Dow component to lose 50% or more over the course of a year in 2005 -- extended its 2006 gain to over 40%, soaring 8.3% after Merrill Lynch upgraded the auto giant to Buy from Neutral and set a price target of $37.
Further underscoring a day that as favored by bargain hunters was the fact that Health Care, Technology, and Utilities -- the year's three worst performing economic sectors -- were today's top three performers. Despite more consolidation in HMOs and declines in drug stocks, renewed enthusiasm in biotech and medical equipment helped the Health Care sector pare some of its leading 5.5% year-to-date disappointment. Medtronic (MDT 50.18 +2.23) was the headliner after it raised FY07 and FY08 EPS guidance.
Technology provided the bulk of upside leadership, though, as Microsoft's surge restored some interest in software and semiconductor chipped away at recent weakness. While Utilities also pared some of its losses, Consumer Staples was a more influential leader to the upside, benefiting primarily from its defensive characteristics as Food Distributors and Tobacco were among the top performing S&P industry groups.
Investors getting more relief on the commodity price front, led by a 2.7% pullback in oil prices and a 5.4% decline in gold -- the biggest one-day slide in 12 years, also helped improve sentiment. However, the Energy and Materials sectors -- two of this year's best performers -- succumbed to further profit-taking and prevented the indices from turning in an even better recovery effort. NYSE Adv/Dec 1355/1934...Nasdaq Adv/Dec 1433/1619
DOW Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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