US Market Commentary (After Market Close): Gains Challenged, but Session Ends on Strong Note

Stocks looked like they were going to surrender solid gains as support dwindled in afternoon trade, but as the S&P 500 approached the neutral line in the final hour buyers stepped back in to hand stocks a solid finish.

Renewed weakness in the U.S. dollar helped stocks overcome an early slip that followed a lower-than-expected preliminary consumer sentiment reading of 66.0 for November from the University of Michigan. Meanwhile, news of a deeper-than-expected trade deficit for September had little impact on stocks, even though the data will play a role in downward revisions to third quarter GDP calculations.

The dollar's declined remained the primary focus of market participants this session. Following two consecutive advances the greenback moved lower against a basket of major foreign currencies. That caused the Dollar Index to give up 0.6%. The dollar's drop came amid comments from World Bank President Zoellick that indicated the U.S. is limited in its ability to address the weak dollar, while representatives from China indicated that the country's currency would not gain against the dollar in the short term.

Amid the dollar's downturn, stocks were able to spend most of the session sporting broad-based gains, which helped the S&P 500 climb as high as 1.0%. Though the broader market surrendered some of its gains late in the session, stocks still finished firmly higher. That helped the S&P 500 finish with a weekly gain of 2.3%.

Consumer discretionary stocks made up the best performing sector this session. They advanced 1.6% as a group. Abercrombie & Fitch (ANF 40.68, +3.92) was a primary leader after it topped the consensus earnings estimate. JC Penney (JCP 31.21, +1.82) missed earnings expectations, but garnered support during a conference call when it expressed confidence in its sales plan. Nordstrom (JWN 33.99, -0.52) was weak as an earnings miss overshadowed upside guidance.

Financials showed relative weakness for the entire session and was the only major sector to finish with a loss. Weakness among diversified banks (-1.9%) took the sector to a 0.3% loss. Fifth Third (FITB 9.74, +0.20) provided some support, though. Analysts at Credit Suisse initiated coverage on the stock with an Outperform rating.

Trading volume was weak once again as fewer than 1 billion shares exchanged hands on the NYSE. Trading volume on the NYSE averaged just above 1 billion shares this week. The lack of participation is often associated with a lack of conviction.