Stocks are sporting solid gains, but trading thus far has been choppy (Dow +1.7%, Nasdaq +2.0%, S&P 500 +1.7%). Sentiment was given an early boost as foreign indices overcame a recent stretch of weakness to trade higher.
Their rebound was helped by reports that China will add approximately $586 billion to the fiscal spending plan it announced late last year.
The positive headline likely prompted some short-covering as stocks began to look oversold after falling nearly 10% during the past five sessions.
With conditions ripe for a rebound, participants have looked past another batch of gloomy economic data. The latest ADP Employment Report indicated 697,000 jobs were lost in February. The consensus estimate called for 630,000 job losses.
The ISM Services Index for February dipped to 41.6% from 42.9% in January. The reading was slightly ahead of the consensus estimate of 41.0%, but marks the fifth consecutive month of contraction for the services sector. Still, traders showed little surprise to the report.
The positive bias this session is fueling broad-based gains. Particular strength is being exhibited by large-cap tech names, which are helping the Nasdaq outperform its counterparts. Google (GOOG 319.83, -5.65), however, is lagging after its CEO stated the company is not immune to downbeat economic conditions.
Discount retailer Big Lots (BIG 17.49, +2.95) is trading with a robust gain after posting better-than-expected quarterly earnings and issuing upbeat guidance. BJ's Wholesale (BJ 29.74, +2.30) also reported better-than-expected earnings results, but Costco (COST 40.90, +0.21) fell short of analysts' consensus earnings estimate for the first time in 11 quarters.
Financials stocks (-3.0%) are all alone in negative territory. U.S. Bancorp (USB 10.64, -15.42) is a primary laggard after announcing it will cut its dividend 88% to $0.03 per share. The company said the move will fortify its capital base and expand its strength, while allowing it to redeem the Treasury's preferred stock investment as soon as possible.
General Electric (GE 6.32, -0.69) has fallen to fresh multiyear lows. Its weakness stems from concerns that the company's recent decision to cut its dividend will not be sufficient in creating the capital necessary to protect against future losses.
In turn, many in the market are beginning to anticipate a downgrade to GE's AAA credit rating. The company responded by saying it has no need to raise additional capital.