NEW YORK (Reuters) - U.S stocks advanced in a choppy session on Wednesday as a rally in bank shares and The Travelers, a Dow component, overshadowed Apple’s unexpected drop and weakness in the technology sector.
Equities staged a turnaround in the face of a drop in Apple (AAPL.O), the largest U.S. company by market capitalization and a big weight in both the S&P 500 and the Nasdaq. Apple’s stock fell 4.2 percent to $551.74, after dropping as low as $545.56.
Market participants cited a host of reasons for the slide in the iPad maker’s stock, including a consultant’s report about the company losing share in the tablet market and reports that margin requirements had been raised by at least one clearing firm.
The S&P 500 reversed course after briefly falling below the 1,400 level, seen as a key support point over the past two weeks.
“There’s still psychological interest in buying the market,” said John Brady, managing director at R.J. O‘Brien & Associates in Chicago.
“The S&P hit the 1,400 level so we find again ‘dip buyers’ there. They strongly believe a deal (on the fiscal cliff) is going to get done, and that’s really the trade.”
Investors have been reluctant to take big positions as lawmakers continue to negotiate a deal to avoid a series of mandatory spending cuts and tax increases effective in early January - known as the “fiscal cliff” - that could push the U.S. economy into recession next year.
President Barack Obama told the Business Roundtable, a group of chief executives, that a “fiscal cliff” deal was possible within about a week if Republicans acknowledged the need to raise taxes on the wealthiest Americans.
For several weeks, the market has reacted quickly to often-conflicting headlines out of Washington about budget negotiations, prompting investors to be cautious.
The Dow Jones industrial average gained 123.74 points, or 0.96 percent, to 13,075.52. The Standard & Poor’s 500 Index rose 6.92 points, or 0.49 percent, to 1,411.97. But the Nasdaq Composite Index dropped 9.51 points, or 0.32 percent, to 2,987.17.
Banking shares were the best performers, led by a 6.4 percent climb in Citigroup to $36.48 after the company said it will cut 11,000 jobs worldwide, or about 4 percent of its workforce. The KBW Bank Index rose 2.1 percent.
Bank of America (BAC.N) shares shot up 5.1 percent to $10.40 after hitting a new 52-week high at $10.44.
Shares of Freeport-McMoRan Copper & Gold Inc (FCX.N) slumped 13.6 percent to $33.07. The company said it is acquiring Plains Exploration & Production Co PXP.N and McMoRan Exploration Co MMR.N in two separate deals for $9 billion in cash and stock in a major expansion into energy.
But shares of McMoRan Exploration soared 82.7 percent to $15.46 and Plains Exploration & Production shares surged 25.5 percent to $45.23.
Shares of The Travelers Cos Inc (TRV.N) rose 4.7 percent to $73.81 and ranked as the Dow’s top gainer after the property and casualty insurance company said its preliminary estimate of net losses from Superstorm Sandy was about $650 million after tax.
Economic data from payrolls processor ADP showed U.S. private-sector hiring took a hit in November due to the impact of Superstorm Sandy, which ravaged consumers and businesses in the Northeastern United States, but the huge services sector kept expanding albeit at a modest pace, according to the Institute for Supply Management.
Additional reporting by Rodrigo Campos; Editing by Jan Paschal