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Stocks Regain Ground After Alcoa's Upbeat Results - U.S. Commentary

Stocks turned in a strong performance during trading on Wednesday, regaining some ground after moving sharply lower in the previous session. The markets benefited from a positive reaction to aluminum giant Alcoa's (AA) quarterly results.

The major averages ended the session well off their best levels of the day but still closed firmly in positive territory. The Dow climbed 89.46 points or 0.7 percent to 12,805.39, the Nasdaq rose 25.24 points or 0.8 percent to 3,016.46 and the S&P 500 advanced 10.12 points or 0.7 percent to 1,368.71.

The rebound by stocks came on the heels of the release of Alcoa's first quarter results, which is seen as the unofficial start of the earnings season.

After the close of trading on Tuesday, Alcoa reported first quarter adjusted earnings of $0.10 per share, surprising analysts, who had expected the company to report a loss of $0.04 per share.

The company also reaffirmed its outlook for 7 percent growth in global aluminum demand in 2012. Shares of Alcoa rose by 6.2 percent on the news.

The results generated some optimism about the outlook for corporate earnings, although stocks remain well off their recent highs amid lingering concerns about the global economy.

Stocks saw continued strength following the release of the Federal Reserve's Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts.

The Beige Book said the reports from the Fed districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March.

Among individual stocks, shares of Applied Micro Circuits (AMCC) turned higher over the course of the trading day even though the chip maker warned of a wider than previously estimated fourth quarter loss. Applied Micro Circuits rose by 8.3 percent after hitting a five-month intraday low in early trading.

Meanwhile, Nokia (NOK) came under pressure after the cell phone maker slashed the first quarter outlook for its devices and services unit. Shares of Nokia plunged 15.7 percent to a fourteen-year low.

Sector News

After turning in some of the market's worst performances in the previous session, housing stocks saw considerable strength on the day. The Philadelphia Housing Sector Index rose by 2.9 percent after tumbling by 3.9 percent on Tuesday.

PulteGroup (PHM) helped to lead the housing sector back to the upside, advancing by 9.1 percent. The gain by PulteGroup came after it ended the previous session at a two-month closing low.

Significant strength was also visible among networking stocks, as reflected by the 2.7 percent gain posted by the NYSE Arca Networking Index. Adtran (ADTN) posted a standout gain, jumping 7.9 percent after reporting better than expected first quarter earnings.

Banking stocks also showed a strong move to the upside on the day, resulting in a 2.1 percent gain by the KBW Bank Index. With the gain, the index halted a five session losing streak.

Tobacco, semiconductor, telecom, and brokerage stocks also posted notable gains, while gold and natural gas stocks bucked the uptrend by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday following the sell-off seen on Wall Street overnight. Japan's Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng Index ended the day down by 1.1 percent.

Meanwhile, the major European markets moved to the upside on the day but closed well off their best levels. While the German DAX Index advanced by 1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries gave back some ground after moving sharply higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4 basis points to 2.028 percent.

Looking Ahead

Economic data is likely to be in focus on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, producer price inflation, and the U.S. trade deficit.

by RTTNews Staff Writer

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