Stocks Show Substantial Rebound Following Yesterday's Sell-Off - U.S. Commentary

(RTTNews) - Following the sell-off seen in the previous session, stocks showed a substantial rebound over the course of the trading day on Wednesday. The tech-heavy Nasdaq more than offset yesterday's loss to reach a new record closing high.

The major averages all closed firmly positive, although the Nasdaq outperformed its counterparts. The Nasdaq surged up 73.84 points or 1.5 percent to 5,106.59, while the Dow climbed 121.45 points or 0.7 percent to 18,162.99 and the S&P 500 advanced 19.28 points or 0.9 percent to 2,123.48.

The strength on Wall Street was partly due to bargain hunting on the heels of the steep drop seen in the previous session, which came amid concerns about the outlook for interest rates.

Analysts suggested that yesterday's pullback was overdone, citing expectations that the Federal Reserve will delay its first rate hike until later in the year.

Buying interest was also generated by optimistic comments from Greek Prime Minister Alexi Tsipras regarding his nation's negotiations with creditors.

Tsipras told reporters his government is close to an agreement to secure funding from its European and International Monetary Fund lenders.

"We have made many steps. We are on the final stretch towards a positive deal," Tsipras said, although he did not provide any details.

Meanwhile, traders largely seemed to shrug off separate comments from European Union officials downplaying the optimism displayed by Tsipras.

European Commission Vice President Valdis Dombrovskis noted the two sides are working toward an agreement as quickly as possible but still have a ways to go.

"We are working very intensively to ensure a staff-level agreement," Dombrovskis said. "We are still not there yet."

Among individual stocks, shares of Tiffany (TIF) moved sharply higher on the day after the upscale jewelry retailer reported better than expected first quarter results.

Set-top box maker TiVo (TIVO) also turned in a strong performance after reporting first quarter earnings that beat analyst estimates. The company also announced the acquisition of software solutions provider Cubiware.

On the other hand, shares of Michael Kors Holdings (KORS) came under pressure after the luxury goods retailer provided disappointing guidance.

Sector News

Semiconductor stocks showed a particularly strong move to the upside on the day, driving the Philadelphia Semiconductor Index up by 3.9 percent. With the gain, the index reached its best closing level in over fourteen years.

Broadcom (BRCM) helped to lead the semiconductor sector higher, soaring 21.8 percent amid reports the chipmaker is close to being acquired by Avago Technologies (AVGO).

Considerable strength was also visible among airline stocks, which regained ground after falling sharply over the past few sessions. The NYSE Arca Airline Index jumped 2.1 percent, bouncing off a five-month closing low.

Telecom stocks also turned in a strong performance, resulting in a 1.7 percent advance by the NYSE Arca Telecom Index. Frontier Communications (FTR) surged up by 7.3 percent after a double upgrade by Morgan Stanley.

Computer hardware, software, brokerage, and biotechnology stocks also saw notable 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 turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index crept up by 0.2 percent, while Hong Kong's Hang Seng Index dropped by 0.6 percent.

Meanwhile, the major European markets all moved notably higher on the day. While the French CAC 40 Index surged up by 2 percent, the German DAX Index and the U.K.'s FTSE 100 Index jumped by 1.3 percent and 1.2 percent, respectively.

In the bond market, treasuries recovered from early weakness to end the session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.135 percent.

Looking Ahead

Economic data may be back in focus on Thursday, with traders likely to keep an eye on reports on weekly jobless claims and pending home sales.