U.S. Stocks Move Mostly Higher After Early Volatility

Stocks showed a lack of direction early in the session on Wednesday but moved mostly higher over the course of the trading day. With the upward move, the Dow more than offset the loss posted during Tuesday’s session, reaching a new record closing high.

The major averages bounced back and forth across the unchanged line in early trading but climbed more firmly into positive territory as the day progressed.

The Dow jumped 337.28 points or 0.8 percent to 43,077.70, the Nasdaq rose 51.49 points or 0.3 percent to 18,367.08 and the S&P 500 climbed 27.21 points or 0.5 percent to 5,842.47.

The advance by the Dow was partly due to a strong gain by Cisco Systems (CSCO), with the networking giant surging by 4.3 percent after Citi upgraded its rating on the company’s stock to Buy from Neutral.

The blue chip index also benefited from a rebound by health insurance giant UnitedHealth (UNH), which jumped by 2.7 percent after plunging by 8.1 percent on Tuesday.

The choppy trading seen early in the day came amid some uncertainty about the near-term outlook for the markets on the heels of Tuesday’s pullback.

The downturn on Tuesday, which was led by tech stocks after Dutch chipmaker ASML (ASML) warned of “customer cautiousness,” came after the Dow and the S&P 500 reached record closing highs on Monday.

Buying interest emerged over the course of the session, however, as traders remain optimistic about the strength of the U.S. economy ahead of the release of several key reports on Thursday.

Reports on weekly jobless claims, retail sales and industrial production are likely to be in focus as traders look for additional clues about the outlook for the economy and interest rates.

The Labor Department released a report this morning showing a continued decrease by prices for U.S. imports in the month of September.

The report said import prices fell by 0.4 percent in September after slipping by a revised 0.2 percent in August. The decline matched economist estimates.

Compared to the same month a year ago, import prices edged down by 0.1 percent, marking the first year-over-year decrease since February.

“Import prices do not feed through directly to producer and consumer prices but are a signal inflationary pressures remain muted and adds some support to another rate cut in November,” said Matthew Martin, Senior U.S. Economist at Oxford Economics.

The Labor Department also said export prices slid by 0.7 percent in September after slumping by a revised 0.9 percent in August. Economists had expected export prices to fall by 0.4 percent.

Export prices in September were down by 2.1 percent compared to the same month a year ago, reflecting the largest year-over-year decrease since January.

Sector News

Airline stocks saw substantial strength on the day, driving the NYSE Arca Airline Index up by 4.8 percent to its best closing level in almost five months.

United Airlines (UAL) helped lead the sector higher, soaring by 12.4 percent after reporting better than expected third quarter results and announcing a $1.5 billion share buyback.

Significant strength was also visible among banking stocks, with the KBW Bank Index climbing by 1.7 percent to a two-year closing high.

Utilities, housing and oil service stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

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 1.8 percent, while Australia’s S&P/ASX 200 Index declined by 0.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index jumped by 1.0 percent, the German DAX Index slipped by 0.3 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries extended the upward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.2 basis points to 4.016 percent.

Looking Ahead

Trading on Thursday is likely to be driven by reaction to the slew of U.S. economic data, including the reports on weekly jobless claims, retail sales and industrial production.

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