US Market Commentary (After Market Close): Stocks Surrender Gains as Financials Fall and Jobs Report Looms

For the second straight session stocks failed to hold fractionally improved 2009 highs. This session's reversal came as financials fell out of favor and concerns mounted for tomorrow's jobs report. A disappointing ISM reading didn't offer any help.

Bank of America (BAC 15.76, +0.11) helped put stocks on an upward path with news that it will repay its $45 billion TARP loan with $26.2 billion in excess liquidity and $18.8 billion in proceeds from the sale of common equivalent securities. That prompted several brokerage firms to issue upgrades on the stock, while analysts at Fitch upgraded the company's credit ratings.

In light of Bank of America's announcement, FDIC Chairman Bair stated that regulators are being very careful and very measured about letting banks repay TARP funds, Reuters reported. Meanwhile, Fed Chairman Bernanke felt the need to defend initial bank bailouts during his reconfirmation hearing. Bernanke didn't offer any new insights into the health of the financial system or the broader economy, though.

Conversely, European Central Bank President Trichet provided an increased 2010 GDP forecast for Europe, but also made dovish comments regarding policy. That caused the euro to slide and the U.S. dollar to gain ground. Initial weakness in the greenback had helped support a positive tone among participants in the early going. The dollar finished with a 0.1% gain against other currencies.

Financials also failed to provide steady support. The sector had been up as much as 1.8% early on, but it tumbled to a 2.1% loss. Principal Financial Group (PFG 22.52, -3.46) proved to be a heavy drag on the sector. Its shares endured their worst single-session percentage slide in more than six months after the company issued downside guidance for fiscal 2010.

The broader market was also undercut by concerns about the government's official nonfarm payrolls report, which is due tomorrow morning, even though White House representatives stated that they have no figures that suggest an increase in the unemployment rate. Unemployment already stands at a 25-year high.

A disappointing ISM Service Index for November added to selling pressure. The sub-50 reading of 48.7 suggests that last month's service sector activity contracted, which is a surprise since the consensus estimate had been pegged at 51.5 following the October's reading of 50.6.

After sellers knocked stocks from their early perch, the market spent most of the afternoon moving sideways in a narrow range. However, pressure mounted late in the session to hand stocks a broad-based loss—telecom (+0.2%) and utilities (+0.3%) were the only two sectors to advance.

Due to a generally disappointing batch of monthly same-store sales results, retailers struggled for the entire session. They finished with a 1.2% loss. Macy's (M 15.81, -0.49), JC Penney (JCP 28.35, -0.82), and TJX Companies (TJX 37.31, -1.08) were among the worst performers in the group. November same-store sales for Macy's slid 6.1%, while JC Penney said its monthly sales fell 5.9%. TJX Companies actually logged an 8.0% increase in its same-store sales, but that was disregarded when the company reaffirmed its downside guidance.

Comcast (CMCSA 15.91, +0.97) had a strong session, however. It announced that it has entered a definitive agreement to take majority control of NBC Universal from General Electric (GE 16.00, -0.07). Comcast will pay GE $6.5 billion to secure that stake, while GE will have the option to sell its remaining stake in coming years.