MarketView for April 11

Summary

An encouraging start to earnings season, specifically Alcoa, helped the major equity indexes rebound on Wednesday after five days of losses that pushed the S&P 500 index below a key technical level. Alcoa ended the day up 6.3 percent to close at $9.90, a day after the component of the Dow Jones Industrial Average reported a surprise first-quarter profit, easing concerns about a weak earnings season.

Nonetheless, on Tuesday, the S&P 500 closed below its 50-day moving average for the first time since December, and on Wednesday the level provided technical resistance to its rebound. The S&P's 50-day moving average is now near 1,373, close to Wednesday's session high.

Equities cut gains late in the session after the Federal Reserve said rising energy costs were a concern for economic growth. Atlanta Fed President Dennis Lockhart said the economy would have to get a lot worse before the central bank would offer more stimuli.

Sectors linked with economic growth led the way higher as their recently beaten-down prices made them attractive to bargain hunters. The S&P financial sector index rose 1.6 percent. Bank of America gained 3.7 percent to $8.86.

Google, JPMorgan Chase and Wells Fargo are among the companies slated to report later this week.

The economy kept growing moderately in the late winter months, although rising gas prices were beginning to worry producers and consumers across the country, the Federal Reserve said in its latest "Beige Book" summary of national activity. This assessment had little impact on equities.

European Central Bank Executive Board member Benoit Coeure, calming fears about the euro zone, said on Wednesday the central bank still had the Securities Market Program (SMP) in place allowing it to purchase the debt of euro-zone nations, should the need arise.

Owens Illinois rose 6.9 percent to close at $23.52, a day after the company forecast a 35 percent rise in its first-quarter profit.

In contrast, Nokia fell 15.7 percent to close at $4.24, after the mobile phone maker warned its phone business would post losses in the first two quarters this year, as it struggles to revamp its product line.

Volume was light, with about 6.31 billion shares changing hands on the three major equity exchanges, a number that was below last year's daily average of 7.84 billion shares.

Beige Beige Book Warns of Rising Energy Prices

Economic activity grew moderately in the late winter months but rising energy prices were beginning to worry manufacturers and retailers across the country, the Federal Reserve said on Wednesday.

"Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March," the central bank said in its latest "Beige Book" summary of national activity.

However, the Fed also said that positive signs included stronger manufacturing activity, steady hiring and improved retail business in much of the country. But overlying that was a sense of concern that costlier energy and rising gasoline prices were a threat.

"While the near-term outlook for household spending was encouraging, contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come," the Beige Book indicated.

The report, based on data collected before April 2, comes from business contacts in each of the 12 districts that have regional Fed banks and is thus seen as a real-life complement to the more academic speeches and analyses that flow from the central bank.

Its description of growth at a "modest to moderate pace" was unchanged from the prior summary issued at the end of February. However, coming after last week's government report showing only 120,000 jobs created in March, the fewest since October, it sounded a bit more upbeat about the job market.

"Hiring was steady or showed a modest increase across many districts," it said. "Difficulty finding qualified workers, especially for high skilled positions, was frequently reported."

Fed policymakers will use the information to assess the economy when they meet April 23-24 to consider whether to change interest-rate policy.

Atlanta Fed Bank President Dennis Lockhart, a voting member of the policy-setting Federal Open Market Committee, said on Wednesday he would be "somewhat reticent to consider another round of quantitative easing" at this time.

The Beige Book's caution about rising energy prices seemed to be borne out in separate Labor Department data showing imported petroleum costs were still on the rise. March import prices climbed by the most in nearly a year on sharply higher petroleum costs, the Labor Department said.

Imported petroleum prices alone increased 4.3 percent, the biggest gain since April 2011. That helped drive overall import prices up 1.3 percent for the biggest monthly gain since April 2011, the Labor Department added.

There are ample signs that higher gasoline prices are a weight on the U.S. economy, still burdened by high unemployment and a soft housing sector following the 2007-2009 re Alcoa Inc rose 6.3 percent to $9.90 a day after the Dow component reported a surprise first-quarter profit, easing concerns about a weak earnings season.

Applications for U.S. home mortgages fell last week despite a drop in the average interest rate for 30-year mortgages, the Mortgage Bankers Association said in a separate report on Wednesday.

As for export prices, the Labor Department report showed they rose 0.8 percent last month,. Export prices increased 0.4 percent in February.