After suffering choppy trading for much of Wednesday's session, stocks ultimately closed higher on the day. The uncertainty seen for most of the day came as investors responded to a mix of positive and negative news from both the economic and corporate fronts.
In economic news, wholesale inventories fell by much more than economists had been expecting in the month of February, according to a report released by the Commerce Department, although the report also showed an increase in wholesale sales.
The report showed that wholesale inventories fell 1.5 percent in February following a revised decrease of 0.9 percent in January. Economists had expected inventories to fall by 0.6 percent compared to the 0.7 percent decrease originally reported for the previous month.
At the same time, the Commerce Department said that wholesale sales edged up 0.6 percent in February following a 2.4 percent decrease in January. The increase in sales came on the heels of seven consecutive monthly decreases.
Separately, the Mortgage Bankers Association revealed that its index of mortgage application volume rose 4.7 percent on a seasonally adjusted basis for the week of April 3rd following a 3 percent increase in the previous week.
Later, stocks saw some weakness on the heels of the minutes of the March Federal Open Market Committee meeting, which said that committee members remain concerned about downside risks to an already weak outlook for economic activity.
The minutes showed that nearly all of the meeting participants felt that economic conditions had deteriorated relative to their expectations at the time of the January meeting.
On the corporate front, Pulte Homes (PHM) has agreed to acquire rival Centex Corp. (CTX) in a stock-for-stock deal. The deal is valued at $1.3 billion and will create the nation's largest homebuilding company.
Under the terms of the agreement, Centex shareholders will receive 0.975 shares of Pulte common stock for each share of Centex they own. Based on Pulte's closing price on Tuesday, the deal values Centex at $10.50 per share, a 38 percent premium to Centex's closing price.
Meanwhile, Dow component Alcoa (AA) reported a $497 million net loss for the first quarter, hurt by the impact of the economic downturn on its core industrial and commercial markets as well as an historic decline in aluminum prices.
The major averages all ended the day in positive territory, although off their best levels of the day. The Dow closed up 47.55 points or 0.6 percent at 7,837.11, the Nasdaq closed up 29.05 points or 1.9 percent at 1,590.66 and the S&P 500 closed up 9.61 points or 1.2 percent at 825.16.
While the major sector indices experienced some volatility over the course of the trading day, most ended the day firmly in positive territory. Some of the strongest performances came out of the retail sector, driving the S&P Retail Index up 4.5 percent on the day.
Within the retail sector, Petsmart Inc. (PETM) was one of the biggest gainers, closing up 7.3 percent on the day. With the advance, the stock ended the trading session at its best closing level in six months.
Significant strength was also visible in the airline sector, as reflected by the 3.9 percent gain posted by the Amex Airline Index. The index more than offset the loss that it posted in the previous session to reach a more than one-month closing high.
Networking, computer hardware, and semiconductor stocks also showed strong upward moves on the day, contributing to the standout gain posted by the tech-heavy Nasdaq.
While natural gas, steel, and real estate stocks also posted notable gains, weakness in the banking sector helped to limit the upside for the markets. The Kbw Bank Index ended the day down 1.5 percent, adding to the losses posted in the two previous sessions.
After seeing some volatility over the course of the session, a majority of the Dow components eventually ended the day in positive territory, contributing to the gain by the blue chip index.
A strong gain by Home Depot (HD) helped to push the Dow higher into the close, with the home improvement retailer closing up 3.1 percent. With the gain, the stock closed at its best level in three months.
Alcoa also showed a strong upward move despite the release of its disappointing quarterly results, with the aluminum producer closing up 3.5 percent. America Express (AXP), IBM (IBM) and DuPont (DD) also posted notable gains.
At the other end of the spectrum, Bank of America (BAC) and General Motors (GM) posted significant losses, helping to limit the upside for the Dow. Bank of America closed down 4.1 percent, while GM posted a 3.5 percent loss.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Wednesday following the weakness seen on Wall Street overnight. Japan's benchmark Nikkei 225 Index showed a notable decline, closing down 2.7 percent.
Meanwhile, the major European markets ultimately ended the session mixed. The French CAC 40 Index and the German DAX Index posted gains of 0.7 percent and 0.8 percent, respectively, while the U.K.'s FTSE 100 Index ended the trading session down 0.1 percent.
In the bond market, treasuries ultimately closed near their highs of the day. Subsequently, the yield on the 10-year note ended the session down 6.2 basis points at 2.847 percent.
While trading activity on Thursday may be somewhat subdued ahead of the three-day weekend, several key economic reports are due to be released before the start of trading.
Employment will likely be back in focus, with weekly initial jobs claims due to be released at 8:30 a.m. ET. At the same time, U.S. international trade gap data as well as import and export price data will also be made public.
At noon, National Economic Council Director Lawrence Summers is scheduled to speak to the Economic Club of Washington.
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