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Stocks notch gains, taking back some losses from previous day

Stocks notch gains, taking back some losses from previous day
Investors appeared to shake off concerns about the prior day's surge in bond yields. Above, the facade of the New York Stock Exchange. (Spencer Platt / Getty Images)

U.S. stocks notched solid gains Wednesday, recouping some of the market's losses from a day earlier.

Technology and healthcare companies drove much of the rebound, outweighing losses in safe-play stocks such as utilities and real estate investment trusts. Small-company stocks fared better than the rest of the market.

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Macy's led a rally among retailers after reporting surprisingly strong results, adding to the strong wave of corporate earnings in recent weeks.

"Earnings growth has shown through, and that's been primarily based on strong fundamental growth from U.S. companies," said Jamie Lavin, global investment specialist at J.P. Morgan Private Bank. "And when equity markets are able to look through to that and we don't have any major geopolitical headlines, we tend to have stronger days in the market."

The Standard & Poor's 500 index rose 11.01 points to 2,722.46. The Dow Jones industrial average gained 62.52 points to 24,768.93. The increase nudged the 30-company average to a small gain for the year.

The Nasdaq composite added 46.67 points to 7,398.30. The Russell 2000 index of smaller-company stocks picked up 16.03 points to 1,616.37, topping its last all-time high in January.

The stock indexes wavered little from their upward trajectory Wednesday as investors appeared to shake off concerns about the prior day's surge in bond yields. The market also failed to react much to a Commerce Department report early Wednesday that showed U.S. residential construction fell 3.7% in April following a steep drop in apartment construction.

"The market is taking the weaker number with a grain of salt, remembering that colder weather could be a factor," Lavin said. "Year-over-year housing permits are still up."

Technology and healthcare companies bounced back Wednesday after taking some of the worst losses a day earlier. Western Digital rose 4.9% to $87.02, while Cerner added 2.9% to $59.97.

Investors continued to sift through the latest batch of corporate report cards from big-name retailers, many of which are issuing quarterly results this week.

The latest results from Macy's far exceeded analysts' expectations. The department store operator noted that its Bloomingdale's and Bluemercury divisions, as well as its flagship store brand, all did well. The company's shares led all stocks in the S&P 500, vaulting 10.8% to $33.17.

"Seeing encouraging earnings and guidance from Macy's, on top of as-expected growth in retail sales, it gives investors additional reason to be optimistic," said Sam Stovall, chief investment strategist at CFRA Equity Research.

Office Depot climbed 5.1% to $2.46 after the office supply company maintained its forecasts for the year.

Several other retailers also moved higher. Nordstrom added 2.4% to $51.05, while L Brands gained 2.6% to $34.19. Target shares picked up 2.9% to $75.23.

Investors will get to pore over more results from retailers Thursday, including Walmart, J.C. Penney and Nordstrom.

"Retail is important because it's a reflection of consumer sentiment and you have many people who are employed by the brick-and-mortar retailers," Stovall said.

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Abaxis was among the big gainers Wednesday. The veterinary diagnostics products company rose 16.2% to $83.34 after it agreed to be acquired by Zoetis.

Traders bid up shares in Teva Pharmaceutical Industries after Warren Buffett's company Berkshire Hathaway more than doubled the size of its investment in the Israeli drugmaker. Teva added 2.9% to $20.88. Phillips 66 slipped 0.1% to $118.16 after Berkshire sold about half its investment in the oil and gas company.

Bond prices fell. The yield on the 10-year Treasury rose to 3.10% from 3.07% late Tuesday, when the yield climbed to its highest level in nearly seven years.

The pickup in bond yields weighed on utilities and other high-dividend paying stocks, adding to their losses from a day earlier. Sempra Energy fell 1.8% to $103.34.

Benchmark U.S. crude oil recovered from an early slide, adding 18 cents to settle at $71.49 a barrel in New York. Brent crude, used to price international oil, rose 85 cents to $79.28 a barrel in London.

The dollar fell to 110.25 yen from 110.38 yen on Tuesday. The euro weakened to $1.1802 from $1.1847.

Gold rose $1.20 to $1,291.50 an ounce. Silver added 10 cents to $16.37 an ounce. Copper gained 1 cent to $3.07 a pound.

In other energy futures trading, heating oil rose 2 cents to $2.27 a gallon. Wholesale gasoline climbed 5 cents, or 2%, to $2.25 a gallon. Natural gas lost 2 cents to $2.82 per 1,000 cubic feet.

Major indexes in Europe finished higher Wednesday. Germany's DAX gained 0.2%, while France's CAC 40 added 0.3%. Britain's FTSE 100 rose 0.1%.

In Asia, Japan's Nikkei 225 stock index lost 0.4% following new data showing that Japan's economy contracted in the first quarter. The Kospi in South Korea was essentially flat. Hong Kong's Hang Seng slipped 0.1%.

UPDATES:

2:50 p.m.: This article was updated with closing market prices.

This article was originally published at 7:30 a.m .

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