Market Commentary (After Market Close): Stocks Make Modest Gains Amid Headwinds

A rebound by the U.S. dollar and some technical resistance caused stocks to make an early pullback from 2009 highs and spend the rest of the session trading in lackluster fashion.

Broad-based buying in overseas markets amid strong economic data from Asia and solid earnings from some major industry players in Europe helped inspire a positive tone among U.S. participants in the early going. That combined with renewed weakness in the U.S. dollar to send the S&P 500 1.1% higher to a fractionally better 2009 high in the first hour of trade.

However, the dollar managed to garner support and swing the Dollar Index from a 0.3% loss and a fresh 52-week low to a gain of 0.3% at its session high. It settled with a gain closer to 0.1%, but that was enough to keep stocks from extending their earlier gains.

Stocks were also stymied by technical resistance as the 500 S&P flirted with the trend line for 2007-2008 highs, while the Dow tested its 50% retracement of the bear market decline. Despite the resistance, the Dow was able to log its sixth straight gain and register a new intraday high and closing high for 2009. The S&P 500 also set a fractionally better 2009 closing high, but a close above 1100 continues to elude the broader market index.

Technical resistance and a firmer dollar kept the financial sector from providing the broader market with much leadership, even though the sector spent virtually the entire session showing strength. After being up more than 2%, financials settled with a 1.4% gain.

Materials stocks also finished solidly higher. The sector settled with a 0.9% gain, helped by strength among commodities prices, which were generally higher in the face of the firmer dollar. Before settling pit trade 1.1% higher at $1114.50 per ounce, gold hit another record high of $1119.10 per ounce. That gave gold stocks gain 1.6% and the SPDR Gold Trust (GLD 109.60, +1.21) hit a new record high.

Gains were generally broad based as nine of the 10 major sectors finished with a gain. Utilities were the only sector to post a loss; they settled 0.3% lower.

Retailers also had a weak session after Macy's (M 17.86, -1.57) issued downside guidance, but the group's 0.3% decline wasn't enough to derail the consumer discretionary sector (+0.5%).