US Market Commentary(After Market Close): Late Selling Effort Leaves Stocks to Settle with Loss

An aggressive selling effort in the final hour of trade took the stock market from a solid gain to a considerable loss. The downturn was broad based and left many of the major sectors to settle at session lows.

Stocks had been showing moderate weakness ahead of the opening bell, but jumped out to a strong gain in the early going. The S&P 500 even made its way to a near 1% gain so that it fractionally set a new high for 2009.

Financials underpinned the stock market's early advance. The sector traded to a gain of 1.3% following strong earnings from Morgan Stanley (MS 34.08, +1.56) and U.S. Bancorp (USB 24.43, +0.63). However, financials rolled over in late trade and settled with a 1.9% loss as pressure intensified against Wells Fargo (WFC 28.90, -1.56), which was hit with a midday downgrade by widely-followed analyst Dick Bove. Bove, and others, were unimpressed with Wells Fargo's report, even though it featured better-than-expected earnings.

As financials fell under a strong fit of selling pressure, the broader market also buckled.

Even energy stocks couldn't hold their gains into the close. The sector overcame an early loss of roughly 0.9% to climb to a gain of nearly 2% before falling back into the red to finish with a 0.2% loss. Energy stocks had been helped by higher oil prices, which reached new 2009 highs around the $82 per barrel mark following the latest oil inventory data. Crude oil inventories increased 1.31 million barrels, which is below the 1.5 million barrel build that had been expected. Gasoline inventories had a draw of 2.21 million barrels, which is larger than the draw of 850,000 barrels that was widely expected. Oil futures prices closed at $81.37 per barrel, up 2.9%.

Stocks and commodities paid little attention to a weaker dollar in the early going, but the greenback garnered more attention as it extended its slide. The dollar's drop came amid comments from a British central bank governor that suggested higher interest rates could be in the offing. That strengthened the British pound, but helped send the Dollar Index to a fresh 12-month low.

Nine of the 10 major sectors fell to a loss -- only utilities (+0.2%) posted a gain.

Health care stocks had lagged for virtually the entire session as participants shrugged off better-than-expected earnings and an upside forecast from Eli Lilly (LLY 33.66, -1.58). They finished with a 1.3% loss.

Consumer discretionary stocks settled with the steepest loss of any major sector. They settled down 1.5% as retailers fell to a 1.9% loss. Retailers had actually been up as much as 1.3%.

Trading volume was higher this session than in recent sessions, but still shy of longer-term averages. Nonetheless, trading volume spiked into the close, which is when this session's selling effort intensified.