YAHOO [BRIEFING.COM]: The S&P 500 gapped down in the early going and traded with a 1.7% loss at its session low, but a downturn by the dollar caused stocks to rally into the afternoon. The major indices were able to reverse nearly all of their losses and finish near session highs.

Stocks looked like they were headed for a dismal session as all 10 of the major sectors in the S&P 500 dropped to losses in excess of 1% in the early going. Pessimism among participants was rooted in a disappointing batch of economic data and moderate strength in the dollar.

According to the latest weekly jobless claims figures, initial claims climbed for the week ended Feb. 20 totaled 496,000, up 22,000 week-over-week. Not only was that worse than expected, it was the highest initial claims count since November. Continuing claims were worse than expected; they totaled 4.62 million.

Durable goods orders failed to temper the negative reaction to the jobless claims numbers. Specifically, durable goods orders increased a stronger-than-expected 3.0% in January, but orders less transportation made a surprise 0.6% decline.

Housing prices for December made a 1.6% monthly decline. They had been expected to increase 0.4%.

Fed Chairman Bernanke testified on monetary policy and economy conditions before the Senate Banking Committee this morning, but his comments reflected those that he offered to the House Financial Services Committee yesterday. In turn, the testimony was generally a non-factor.

In addition to a disappointing lot of data, participants had to grapple with gains by the greenback. The dollar garnered support amid news that Moody's believes ratings on Greece hinge on the country's fiscal reform follow through. Though that comment didn't offer anything new, it had substance in the sense that Moody's is the last ratings agency to have an 'A' rating on Greek sovereign debt. An 'A' rating is required of a country to exchange its bonds with the European Central Bank as collateral for loans under rules that will go into effect at the end of this year. Failure to maintain such a rating could prove problematic as Greece attempts to remedy its fiscal woes.

Despite such consideration, the euro eventually bounced back and pressured the dollar, which finished the session with a 0.1% loss against a basket of foreign currencies. The dollar's reversal helped the stock market break free from range-bound trade near session lows.

Materials stocks were among the primary beneficiaries. The sector had been down more than 2% at its session low, but settled with a modest 0.2% loss. Newmont Mining (NEM 49.02, +2.54) was a primary leader, thanks to better-than-expected earnings for its latest quarter.

Better-than-expected earnings from Limited Brands (LTD 22.15, +0.61) and Kohls (KSS 54.08, +2.49) helped retailers outperform the broader market for the third straight session. Retailers finished with a 0.4% gain, collectively, which helped the consumer discretionary sector settle with a fractional loss. That made it the best performing sector in the broader market.

One of the session's strongest gains was made by Coca-Cola Enterprises (CCE 25.48, +6.30), which surged amid news that its North American bottling business will be acquired by Coca-Cola (KO 53.12, -2.04).

Though the stock market was able to rally amid the greenback's pullback, commodities had a mixed response as the CRB Commodity Index stayed stuck near its session low. It finished with a 1.4% loss. Oil prices gradually made their way off of session lows, but still settled pit trade with a 2.3% loss at $78.17 per barrel. Meanwhile, gold closed with a 1.0% gain at $1108.50 per ounce.

Treasuries traded with moderate strength. They were partly supported by strong results from an at-record $32 billion auction of 7-year Notes. The auction attracted a yield of 3.08%, which was a bit below what had been expected, and a bid-to-cover ratio of 2.98, which was above the recent average of 2.75. However, the indirect bid hit 40.3%, which was below the recent average of 54.4%.

Advancing Sectors: (None)
Declining Sectors: Telecom (-0.4%), Utilities (-0.3%), Financials (-0.3%), Industrials (-0.3%), Tech (-0.2%), Materials (-0.2%), Energy (-0.2%), Consumer Staples (-0.1%), Health Care (-0.1%), Consumer Discretionary (-0.1%)DJ30 -53.13 NASDAQ -1.68 NQ100 +0.00% R2K +0.1% SP400 +0.0% SP500 -2.30 NASDAQ Adv/Vol/Dec 1121/2.27 bln/1500 NYSE Adv/Vol/Dec 1512/1.15 bln/1504