US Market Commentary (After Market Close): Mixed Trade Finishes with Modest Gains

Frequent swings by the U.S. dollar caused stocks to spend most of the session chopping along in a relatively narrow range, but some late support helped the major equity averages make modest gains. Still, the action hasn't provided any clarity to the market's near-term direction.

Stocks slipped in early trade as the greenback trimmed its losses against competing currencies. The dollar's move came as word surfaced that Standard & Poor's revised its outlook for Spain to negative from stable. The news release came a day after Greece's credit rating was cut by Fitch and Moody's made cautionary comments regarding the potential consequences of the ballooning deficits of the U.S. and U.K.

Reports indicated that the U.S. government is not yet ready to leave the financial system completely to itself when word surfaced that the $700 billion financial bailout plan, TARP, will likely be extended until October 2010.

In other political news, Senate Democrats reached a tentative agreement to remove the government-run insurance portion of their health care reform plan. The announcement gave an early lift to shares of managed care providers, but the group rolled over to settle with a 0.2% loss.

Though the Dollar Index looked like it got a lift from an early flight to safety, it was unable to trade with any clear direction. Each of its attempts to pare losses was met with resistance at the neutral line. It finished with a 0.3% loss.

The greenback was unable to make a gain this session, but commodities still fell under a stiff bout of selling pressure. That caused the CRB Commodity Index to drop 1.5%, its worst showing this month.

Oil prices were a primary drag on the CRB. Contracts for crude closed pit trade with oil priced 2.6% lower at $70.70 per barrel, near fresh two-month lows. The move came even though weekly inventory data showed a surprise draw of 3.82 million barrels.

Gold prices slid for a fourth straight session. In the latest round of pit trade prices for the yellow metal fell 2.0% to settle at $1120.90 per ounce.

Despite such weakness, gold stocks garnered particular support. The group gained 2.8%. That helped make the materials sector put together a 1.3% gain, which was the best of any major sector.

Semiconductor stocks had a relatively solid session. They advanced 0.6%, according to the Philadelphia Semiconductor Index, even though Texas Instruments (TXN 25.99, -0.34) fell sharply after it issued an increased earnings forecast.

While Texas Instruments traded with weakness, many large-cap tech issues showed strength for the second straight session. That helped the Nasdaq 100 gain 1.0%, more than double the gain seen by the headline indices.

A weak session for Treasuries concluded with he benchmark 10-year Note down roughly 11 ticks, which put its yield back above 3.4%. Its weakness was worsened by softer-than-expected demand in an auction of 10-year Notes. The auction produced a bid-to-cover ratio of 2.6, which was right at the average for the year, but down from the previous auction's ratio of 2.8.

Consistent with recent trade, action in the broader market this session was largely mixed and lacked clear direction. Though stocks have struggled to hold fresh highs for 2009 in recent weeks, their dips have been short and shallow as many continue to step in and provide support as they try to chase the easy gains that have been made since March.