US stocks rally on Wednesday

A stronger-than-expected report on new-home sales boosts momentum

U.S. stocks rallied on Wednesday, 24 September 2014 with the S&P 500 and Dow Jones Industrial Average recording their best one-day percentage gain in more than 5 weeks. The stock market ended the midweek session on an upbeat note despite enduring a shaky start to the day. The rebound snapped a 3-day losing streak that has been blamed in part on worries about global growth and fighting in Iraq and Syria. A stronger-than-expected report on new-home sales and dovish comments from two Federal Reserve officials, might have contributed to gains.

The Dow Jones Industrial Average gained 155.02 points, or 0.9%, to 17,210.89, recovering some of the steep losses from the previous two sessions. Meanwhile, the tech-heavy Nasdaq Composite added 46.53 points, or 1.03%, to 4,555.22. The S&P 500 gained 15.63 points, or 0.9%, to 1,998.38.

Broad-based gains were led by health care and consumer staples sectors.

Trader and investor nervousness in the market place waned Wednesday following this week's U.S. airstrikes that hit ISIS terrorists at several locations in Iraq and Syria. World stock markets had seen some selling pressure on the news, but not anything close to a panic.

In overnight news, Germany's Ifo business confidence survey came in below expectations, at 104.7 in September versus expectations of a reading of 105.8. The figure was the lowest since April of 2013.

The World Bank said Wednesday that Russia will see significantly slower economic growth in the coming months, due to sanctions imposed by other nations. The report said Russia would still likely eke out slight economic growth to just avoid recession the next couple years.

U.S. economic data released Wednesday included the weekly MBA mortgage applications survey, new residential sales, and the weekly DOE liquid inventory reports.

New home sales jumped 18.0% in August to 504,000 from an upwardly revised 427,000 (from 412,000), while the consensus expected an increase to 435,000 . That was the first time that new home sales surpassed 500,000 since May 2008, and the increase was in-line with the spike in the September NAHB home builder index, which reached its highest point since November 2005. With the exception of the Midwest region, which was flat, sales growth was extremely strong across the U.S. That included a 50.0% increase in sales in the West and a 29.2% increase in the Northeast. Separately, the weekly MBA Mortgage Index fell 4.1% to follow last week's 7.9% spike.

Among stocks under focus, Bed Bath & Beyond shares climbed more than 7.4% to lead the S&P 500 after the home-furnishings retailer late Tuesday posted better-than-expected quarterly earnings. KB Home fell 5.30%, after the home builder reported fiscal third-quarter profit and sales that fell well short of expectations.

Bullion prices ended the U.S. day session moderately lower on Wednesday, 24 September 2014 at Comex. A rally in the U.S. dollar index to a four-year high has been a major bearish factor working against gold and silver. Gold prices on Wednesday surrendered recent gains as the U.S. dollar gained against rivals on strong economic data.

Gold for December delivery fell $2.50 higher to settle at $1,219.50 an ounce. December silver fell 7 cents to $17.64 an ounce.

Crude-oil futures rose on Wednesday, 24 September 2014 at Nymex after weekly inventories data showed an unexpected decline in supplies. Some of the gains were capped due to a weaker-than-expected German business confidence index, which hit its lowest in more than a year, and news Libya's crude-oil production rose to 900,000 barrels a day with a key field restarting production.

Light, sweet crude futures for November delivery rose $1.24, or 1.4%, to settle at $92.80 a barrel on the New York Mercantile Exchange.

Earlier Wednesday, the Energy Information Administration reported that U.S. crude supplies declined by 4.3 million barrels in the week ended 19 September 2014. That contrasted with expectations of an increase of 1 million barrels.

The report also showed that gasoline supplies declined 400,000 barrels, and inventories of distillates, which include heating oil, were up 800,000 barrels. The market had expected gasoline inventories to decline 600,000, and distillates stockpiles to increase 160,000 barrels.

Today's session was met with above-average participation with more than 730 million shares changing hands at the NYSE.

Tomorrow, weekly Initial Claims (consensus 300K) and Durable Orders for August (consensus -16.3%) will be released at 8:30 ET.

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