US Market Commentary (After Market Close): Flat Finish as Headlines Fail to Inspire

There were plenty of trading catalysts this session, but participants were generally subdued and left stocks to trade with moderate losses in light volume ahead of the Thanksgiving holiday.

The stock market spent virtually the entire session in negative territory after stocks had logged solid gains in the previous session. Unlike the previous session, though, the dollar bounced between moderate gains and losses before it finished flat. Overseas markets also offered little support as they were hampered with weakness; the Shanghai Composite closed 3.5% lower due, in part, to concern for a lack of market-supportive measures from the country's officials.

Upon a second look, U.S. GDP was determined to have expanded at a 2.8% rate in the third quarter. That was in step with expectations, but it marked a considerable downward revision to the 3.5% increase that was posted as part of the advance GDP estimate.

Despite expectations for the downward revision, the Fed raised its GDP target for 2009 to the range -0.4% to -0.1% from the range -1.5% to -1.0%, according to the minutes from the November 4 FOMC meeting.

Though there is no empirically proven corollary between consumer confidence and spending, participants showed a short-lived, positive response to news that the November Consumer Confidence Index improved to a better-than-expected reading of 49.5. Retailers showed some strength early, but settled the session flat.

However, American Eagle Outfitters (AEO 15.01, +0.47) was a strong performer after it posted third quarter adjusted earnings that met expectations. Discount retailer Dollar Tree (DLTR 51.33, +2.23) brought in better-than-expected earnings and issued in-line guidance.

The biggest earnings announcement came from Dow component Hewlett-Packard (HPQ 50.19, -0.83), however. The company posted in-line earnings that reflected its preannouncement and affirmed an in-line outlook, which it had recently raised. Still, the lack of positive surprises in the report left it to lag for the entire session.

Financials proved to be the biggest drag on trade, though. The sector fell 0.8%. Bank stocks had been under pressure in the early going after Financial Times reported that the Federal Reserve has asked nine of the nation's largest banks to outline how they intend to repay TARP. Though regional banks (-0.3%) and diversified banks (-0.4%) were able to limit their losses, diversified financial services institutions (-1.5%) suffered. Even Bank of America (BAC 16.10, -0.19) couldn't be helped by news that analysts at Fitch placed the lender's Individual Rating on Rating Watch Positive.

At the other end of the performance scale was telecom. The sector finished 1.0% higher, but its lack of weight in the broader market kept it from providing any real leadership. Nonetheless, its gains extended its 2.6% advance in the previous session.

Health care was also a solid performer. The sector closed with a 0.8% gain. Dow component Merck (MRK 36.22, -0.20) failed to participate in the advance, but announced to investors a new $3 billion share repurchase program.

Treasuries found support after a directionless start. In turn, the benchmark 10-year Note advanced 12 ticks, which lowered its yield to 3.30%. The advance followed results from an auction of 5-year Treasuries. The auction fetched a bid-to-cover ratio of 2.81, which is the highest bid-to-cover of the year for the maturity.

Trading volume on the NYSE failed to eclipse 1.0 billion shares for the second straight session. The low level of participation is expected to continue through this week, due to the observance of Thanksgiving on Thursday.