Stocks Mixed After Volatile Session

NEW YORK (TheStreet) -- U.S. equity markets closed mixed Wednesday following a strong rally in Japan on the prospect of looser monetary policy there.

The gap-up Wednesday on Japan's Nikkei came a day after Bank of Japan Gov. Masaaki Shirakawa told reporters in Tokyo that he would step down on March 19, likely paving the way for Prime Minister Shinzo Abe to implement a greater quantitative-easing policy he has pushed for.

The Dow Jones Industrial Average finished up 7 points to 13,987.

Breadth within the blue-chip index was positive, as gainers outpaced decliners 19 to 11. Top-percentage gainers included 3M (MMM), Johnson & Johnson (JNJ), Wal-Mart (WMT) and Alcoa (AA).

Walt Disney (DIS) shares also rose a day after the company said fiscal first-quarter profit dipped slightly but beat expectations. The company earned 77 cents a share on revenue of $11.3 billion. Shares finished up 0.4%.

The biggest decliners were Intel (INTC), Merck (MRK), Caterpillar (CAT) and UnitedHealth Group (UNH).

The S&P 500 ticked up less than 1 point to 1,512. The Nasdaq lost 3 points to 3,168.

In the broad market, sectors were mixed. Laggards included energy, consumer non-cyclicals, conglomerates and technology. Consumer cyclicals and basic materials were the biggest gainers.

Volumes totaled 3.54 billion on the New York Stock Exchange and 2 billion on the Nasdaq. Gainers outpaced decliners by a 1.4-to-1 ratio on the Big Board, and 1.2-to-1 on the Nasdaq.

"Japan has been hot on the hopes of more quantitative easing and, again, today it's one of the biggest days of the year," said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research. "Clearly, people continue to buy the yen; the yen continues to drop massively, and that's creating a pretty good bid for the Nikkei and for their stocks."

Asian markets surged on Wednesday as the rally in Japan encouraged momentum in most of the major markets there. Japan's Nikkei average rose 3.8% overnight to close at 11464. Hong Kong's Hang Seng gained 0.5% to 23,257.

Concerns in Europe were also weighing down stocks as political uncertainties in Spain and Italy, among other countries, saw the euro weaken against the U.S. dollar.

"Those [woes] just remind us that when you have debt-to-GDP that's 100% or higher, that it's a problem that's not going to go away anytime soon, and despite the assurances from the [European Central Bank] it is still likely to be a multi-year uphill battle," said Sam Stovall, chief equity strategist at S&P Capital IQ. "What we're seeing is what our technician believes playing out is a hop, a drop and then a pop."

Stovall said he meant that the markets saw a move up, it may be seeing a move down and it could be poised for another jump up to challenge major U.S. equity indices' historic highs.

The FTSE 100 gained 0.2% on Wednesday as the residue from Japan's spike didn't translate to huge gains in London. The DAX in Germany sank 1.1% after manufacturing orders were lighter than expected. Manufacturing orders for Germany in December rose 0.8% against a 1.8% drop in November, but failed to beat economists' expectations of about 1%.

Crude inventories in the U.S. rose 2.6 million barrels last week due to slower refinery production.

The Mortgage Composite Index increased 3.4% on a seasonally adjusted basis from the prior week, according to the Mortgage Bankers Association. Purchase applications increased 2% since last week. The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances bumped up 3.73% from 3.67%. The rate has increased seven of the past eight weeks.

Gold for April delivery added $5.30 to settle at $1,678.80 an ounce at the Comex division of the New York Mercantile Exchange, while futures for March crude oil contracts dipped 2 cents to $96.62 a barrel.

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