Stocks saw considerable volatility over the course of the trading day on Wednesday before eventually ending the session mixed. A focus on the latest developments in Washington contributed to big swings by the markets.
The major averages ended the day on opposite sides of the unchanged line, with the Nasdaq posting a notable loss. The Nasdaq fell 22.99 points or 0.8 percent to 2,973.70, while the Dow rose 82.71 points or 0.6 percent to 13,034.49 and the S&P 500 edged up 2.23 points or 0.2 percent to 1,409.28.
The volatility on Wall Street came as traders kept a close eye on comments out of Washington, where lawmakers continue to struggle to reach an agreement to avoid the looming fiscal cliff.
Notable selling pressure was seen following remarks by Republican leaders suggesting that the two parties remain far apart on a potential deal.
House Speaker John Boehner, R-Ohio, called on President Barack Obama to respond to an offer put forth by House Republicans while also criticizing a White House plan he said "couldn't pass either house of the Congress."
However, stocks moved back to the upside as Obama spoke to members of the Business Roundtable, indicating that some rank-and-file members of the GOP are considering accepting higher tax rates despite staunch opposition from party leaders.
"We've seen some movement over the last several days among some Republicans," Obama said. "I think there's a recognition that maybe they can accept some rate increases as long as it's combined with serious entitlement reform and additional spending cuts."
"And if we can get the leadership on the Republican side to take that framework, to acknowledge that reality, then the numbers actually aren't that far apart," he added.
The comments regarding the fiscal cliff overshadowed a batch of largely upbeat U.S. economic data, including a report from the Institute for Supply Management showing an unexpected acceleration in the pace of service sector growth.
Among individual stocks, shares of Apple (AAPL) moved sharply lower on the day, weighing on the tech-heavy Nasdaq. Apple tumbled by 6.4 percent amid reports indicating that the company's iPad may lose market share.
Electronic storage stocks turned in some of the market's best performances on the day, driving the NYSE Arca Disk Drive Index up by 3 percent. The gain extended a recent upward move by the index, which ended the session at its best closing level in well over a month.
Western Digital (WDC) helped to lead the storage sector higher, surging up by 7.3 percent after the computer hard drive maker announced an accelerated dividend.
Banking stocks also saw considerable strength, resulting in a 1.7 percent gain by the KBW Bank Index Financial giant Citigroup (C) posted a standout gain, jumping 6.3 percent after announcing plans to cut more than 11,000 jobs.
Utilities, steel, and natural gas stocks also moved notably higher over the course of the trading day, with the Dow Jones Utilities Average reaching a one-month closing high.
Meanwhile, housing stocks moved sharply lower, dragging the Philadelphia Housing Sector Index down by 2.9 percent. M/I Homes (MHO) Standard Pacific (SPF), and PulteGroup (PHM) posted steep losses.
Gold stocks also came under considerable selling pressure, as reflected by the 2.8 percent loss posted by the NYSE Arca Gold Bugs Index. The weakness in the sector came as gold for February delivery dipped $2 to $1,693.80 an ounce.
In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Wednesday. Japan's Nikkei 225 Index advanced by 0.4 percent, while Hong Kong's Hang Seng Index surged up by 2.2 percent.
The major European markets also saw strength on the day. While the U.K.'s FTSE 100 rose by 0.4 percent, the German DAX Index and the French CAC 40 Index both closed up by 0.3 percent.
In the bond market, treasuries ended the day modestly higher but well off their best levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 1.7 basis points to 1.591 percent after hitting a low of 1.575 percent.
While developments in Washington are likely to remain in focus on Thursday, traders are also likely to keep an eye on the Labor Department's report on weekly jobless claims. The outcome of a monetary policy meeting by the European Central Bank could also impact trading.
by RTT Staff Writer
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