Sideway trading continues as equity market awaits clearer sign

08:47, March 11, 2010      

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U.S. stocks spent another day moving in narrow range amid relatively quiet trading on Wednesday as investors digest a mixed wholesale data.

With little economic data released since last week's upbeat jobs report, U.S. stocks were largely flat in the previous two sessions, showing investors would rather wait on the sidelines until they see any further signs of economic recovery.

As of Wednesday's closing, the Dow Jones industrial average rose 2.95, or 0.03 percent, to 10,567.33. The Standard & Poor's 500 index gained 5.17, or 0.45 percent, to 1,145.61 and the Nasdaq was up 18.27, or 0.78 percent, to 2,358.95.

The U.S. Commerce Department released its report on wholesale inventories on Wednesday, the first major economic reading of the week. Data showed U.S. inventories at wholesale level fell by 0.2 percent in January after the one percent drop in December. Meanwhile, sales rose by 1.3 percent, the best reading since the 3. 6 percent increase in November and also marking the tenth straight monthly gain.

The fall in inventories suggested that businesses are still cautious about restocking their storages. Market has been expecting that increasing sales will help to prompt inventories, which would in turn help to boost factory production.

A separate report from the Labor Department said unemployment rose in 30 states in January, suggesting that local labor markets remain weak in most U.S. regions. The data, however, is better than December, when 43 states reported higher unemployment rates, but worse than November, when rates fell in most states.

Last week, the government data showed that the national jobless rate was unchanged in February at 9.7 percent, a better reading than most analysts expected.

Financials rallied on Wednesday amid investors' optimism that the sector will recover as the U.S. economy expands. Citigroup shares gained 3.66 percent to 3.96 dollars; American International Group rallied 10.59 percent to 36.24 dollars.

Technology stocks continued its recent rising momentum and led broader market higher, marking the symbolic 10-year anniversary of the internet bubble reaching its peak. Shares of Chevron, the second-largest U.S. oil company, fell nearly half a percent to 73. 96 dollars and limited the Dow's gains.

In mergers and acquisitions front, Abbott Laboratories agreed to buy Facet Biotech Corp for 27 dollars a share late Tuesday. Abbott Laboratories' stock rose 0.42 percent to 55.03 dollars on the New York Stock Exchange, while Facet's stock surged 66.63 percent to 27.01 dollars on the Nasdaq.

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