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Stocks Rebound but Settle Mixed

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Stocks Rebound but Settle Mixed

Stocks began the trading session in the red and quickly moved lower as investors exited trading positions. The S&P 500 index moved quickly toward support levels and held at former resistance for the balance of the trading session. Traders were leery of taking on new long positions, as tensions in the Ukraine and Chinese economic weakness continue to play a vital role in the trajectory of the US equity markets. Into the close stocks rallied with the Nasdaq and S&P 500 index closing in the black.

On Wednesday, the People’s Bank of China put the country on course to free up interest rates on bank deposits within two years, an unprecedented move that would force the nation’s lenders to compete for customers by offering the best terms.
Currently, the People’s Bank of China maintains a cap on the rate banks can pay depositors. At present, inflation is running at about 2.5%, while a one-year deposit can pay no more than 3.3 which is barely above the inflation level.

Many of the high flying market leading stocks have come under pressure and are likely to lead stock lower if a correction begins to take hold. Tesla (NASDAQ:TSLA) was under pressure after it announced on Tuesday that it will end its sales in New Jersey on April 1, 2014. New Jersey voted yesterday to make it illegal for car makers to sell vehicles to consumers without a dealer. New Jersey follows Arizona and Texas in insisting that Tesla follow the traditional formula of selling vehicles through licensed dealer franchises.

Another stock that was hammered on Tuesday was Fannie Mae (OBB:FNMA). Prior to the opening bell Fannie Mae continued to sell off following a bipartisan bill that was introduced in the Senate that would continue government backing of mortgages but would wind down the firms. The proposal has the backing of the White House.

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