US stocks end midweek with upbeat rally

Small-cap stocks lead the rally

The stock market ended the midweek session on an upbeat note after climbing throughout the day on 15 April, 2015. Wednesday's gains on Wall Street sent key U.S. stock indexes close to record levels, as better-than-expected earnings and a jump in oil prices invigorated stock market bulls. Small-cap stocks led the rally.

Broadly, investors appeared to have brushed off weaker-than-expected economic reports, while the ECB's success rolling out its quantitative-easing program over the past month has provided a favorable backdrop for global stocks.

The Dow Jones Industrial Average added 75.71 points, or 0.4%, to 18,112.41, with more than two-thirds of its 30 components finishing with gains. The Nasdaq Composite ended the session up 33.73 points, or 0.7%, to 5,011.02. The S&P 500 closed 10.78 points, or 0.5%, higher at 2,106.62, within striking distance from the record level reached in March.

Energy stocks rallied more than 2% following a nearly 6% jump by crude-oil futures, which settled at the highest level this year.

Against that backdrop, the ICE U.S. dollar index traded lower, helping to lift demand for dollar-denominated gold.

U.S. data released Wednesday showed that industrial production in March fell by a seasonally adjusted 0.6% down a bit more than expected and the largest decline since August 2012. The Empire State manufacturing index in April fell to negative 1.2 the lowest since December.

Recent uneven U.S. economic data falls into the camp favoring a U.S. interest rate rise later rather than sooner. Still, many believe the Federal Reserve will make its move to raise interest rates in June. Economic reports the next six weeks could well tip the Fed's hand on when it will make its rate-hike move. Traders were awaiting the Federal Reserve's beige book, due out Wednesday afternoon.

In overnight news, China's first-quarter gross domestic product was reported at up 7.0%, year-on-year, for the slowest rate of growth in six years. The figure was in line with market expectations. Asian stock markets sold off on the China news. The slowing rate of economic growth in China is leading to growing notions that China's central bank will continue to stimulate its monetary policy. However, the specter of forthcoming monetary policy stimulus by China's central bank means better demand for commodities is on the horizon.

Among earning reports of the day, Bank of America swung to a profit in the first quarter as it started to recover from its large legal losses in prior years. Shares fell 1.1%. Delta Air Lines posted first-quarter profits that were better than analysts' estimates. Although the strong dollar is creating headwinds, the airline said the strengthening buck contributes to a lower fuel bill. Shares jumped 2.6%.

Late Tuesday, Intel reported a 3% rise in first-quarter earnings, in line with analyst expectations. Shares rallied 4.3%.

Bullion prices finished higher on Wednesday, 15 APril 2015 recouping some of the losses they suffered over the past two trading sessions to reclaim the $1,200-an-ounce level. U.S. economic reports came in weaker than expected, which helped weaken the U.S. dollar making gold more appealing to investors.

Gold for June delivery tacked on $8.70, or 0.7%, to settle at $1,201.30 an ounce on Comex, a day after marking its lowest closing level of the month. May silver also settled up 11.8 cents, or 0.7%, to $16.279 an ounce.

Crude oil futures climbed nearly 6% on Wednesday, 15 April 2015 as a smaller-than-expected weekly increase in U.S. crude supplies and a higher demand forecast from the International Energy Agency lifted prices to their highest settlement level of the year. On the New York Mercantile Exchange, May crude jumped $3.10, or 5.8%, to settle at $56.39 a barrel.

As per the latest EIA report, the EIA on Wednesday reported that crude inventories climbed by 1.3 million barrels for the week ended 10 April 2015. That was smaller than the 3.5 million barrels forecast. The EIA also said gasoline supplies were down by 2.1 million barrels, while distillate stockpiles rose two million barrels last week. Market was looking for a decline of 900,000 barrels for gasoline supplies and a fall of 150,000 for distillates, which include heating oil.

Treasuries ended the day with slim gains, pressuring the 10-yr yield to 1.89% (-1 bp).

Today's participation was ahead of recent averages with more than 850 million shares changing hands at the NYSE floor.

Tomorrow, weekly Initial Claims (consensus 280K) and March Housing Starts (consensus 1.045 million) will be released at 8:30 ET while the Philadelphia Fed Survey for April will be reported at 10:00 ET (expected 7.2).

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