Market Commentary (After Market Close): Whipsaw Trade Ends with Gain

Better-than-expected economic data helped the S&P 500 ascend to a 1.5% gain, but a bout of selling and technical resistance sent stocks to a 0.7% loss before buyers stepped back in to drive stocks to a positive finish.

News that the ISM Manufacturing Index for October came in at 55.7, construction spending in September spiked 0.8%, and pending home sales for September made a 6.1% monthly increase helped bring about some early, broad-based buying, which sent all 10 major S&P 500 sectors into the green.

Financials were a standout as the sector climbed to a 2.5% gain. Investors in the sector paid little attention to news that regional lender CIT Group will enter bankruptcy after weeks of struggling to secure financing and put together a plan for sustainability.

However, financial stocks soon saw their gains reverse as weakness among insurers spread to the rest of the sector. That took the financial sector to a 1.7% loss before buyers stepped back in and helped it finish with a 0.8% gain.

Midsession weakness among financials undercut the broader S&P 500, which was having trouble extending its gains past its 50-day moving average of 1052. Such technical resistance combined with weakness in one of the stock market's leading sectors eventually caused the broader market to roll over and surrender all of its gains.

Stocks were able to garner some support as an underlying bid limited the stock market's move to the downside. That support inevitably helped it settle the session with a gain.

Materials stocks were finished the session with some of the strongest gains. The sector closed 1.0% higher, partly helped by a weaker dollar, which oscillated for the entire session before settling roughly 0.1% lower. The greenback's move lower helped the CRB Commodity Index climb 1.2%.

Other solid gains were made by consumer staples stocks (+1.0%) and consumer discretionary stocks (+0.9%), which were helped by strength in shares of Ford (F 7.58, +0.58). The automaker posted this morning better-than-expected earnings and also announced an increase in market share.

In other earnings news, Humana (37.01, -0.57) posted better-than-expected earnings of its own, but offered a mixed forecast that weighed on the stock. Managed care providers still advanced 1.5% as a group, though.