Stocks spent most of the session trading listlessly as the Dollar Index recovered from losses in the past three sessions to advance 0.2% Wednesday. However, bank stocks emerged with strength after struggling to find direction in the early going. With banks finishing strong, the KBW Bank Index netted a 1.2% gain and the broader financial sector settled at session highs with a 1.0% gain.

The energy sector was the next best performing sector. It finished 0.6% higher even though oil prices closed pit trade 1.7% lower at $69.66 per barrel. Oil prices were hampered by bearish gasoline inventory data, which overshadowed news of a 978,000 barrel draw in crude oil. The consensus had called for a build of 2 million barrels of crude.

Though a stronger dollar likely added to oil’s woes this session, it didn’t derail gold from continuing its ascent. Gold futures closed at $1044.70 per ounce, up 0.5%, but had been as high as $1049.70 per ounce in overnight trade. Small-cap gold stocks and precious metals stocks of a lower quality benefited most from gold’s gains as momentum money trickled into the group. That helped the materials sector (+0.2%) offset general weakness among commodities-related stocks and basic materials stocks that stemmed from a 0.4% decline in the CRB Commodity Index.

Monsanto (MON 74.33, -1.04) was also a drag on the materials sector. The company posted better-than-expected adjusted earnings of $0.02 per share, but reaffirmed downside guidance for fiscal 2010.

Other earnings announcements were generally positive as Yum! Brands (YUM 34.37, -0.49), Costco (COST 59.00, +1.07), and Family Dollar (FDO 28.21, -0.27) each bested earnings expectations for the latest quarter.

Leadership from the financial sector may have led the S&P 500 to a strong finish, but it couldn’t prevent the telecom sector from logging an outsized loss of 2.9%. Weakness among integrated telecom giants AT&T (T 26.18, -0.56) and Verizon (VZ 29.38, -0.31) kept the Dow from making a gain of its own.

After the close, Alcoa (AA) reported third quarter earnings of $0.04 per share, which was $0.13 better than the First Call consensus of a loss of $0.09. Revenue also came in above expectations. The company said, "In the second half of 2009, there are signs that key markets the company operates in are stabilizing. Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11% in the second half of 2009." The stock is trading ~5.6% higher after hours as a result of its earnings release, while close competitor Century Aluminum (CENX) jumped 50 cents (or ~5.2%) to ~$10.20 after hours due to AA’s results.

Seven of the ten sectors were in positive territory, led by financials (+1.0%), energy (+0.62%) and tech (+0.5%). The telecom sector (-2.9%) was the worst performing sector by, with industrials (-0.3%) a distant second.

Futures are higher after hours with S&P 500 futures 2.85 points above fair value of 1053.95 and Nasdaq 100 futures 3.53 points above fair value of 1708.97.

Companies trading higher in after hours in reaction to earnings: AA +5.6%… Companies trading lower in after hours in reaction to news: SVNT -7.1% (announces a 4 mln share common stock offering pursuant to an effective shelf).

Tomorrow morning, two economic reports are scheduled to be released at 8:30ET. First, initial claims figures, which have a consensus of 540K and second, continuing claims, which have a consensus of 6105K.

The major indices started markedly higher as the previous session’s gains were extended amid news that by Australia’s Reserve Bank hiked its key lending rate by 25 basis points to 3.25%. Though the rate hike may strike some as an unlikely impetus for higher stock prices, global participants were encouraged by the symbolism of the act, since it suggests that the global economy has strengthened. That consideration helped drive the Dow Jones World Index to a 1.9% gain, which is its best percentage gain in two months.

Weakness in the U.S. dollar continues to bode well for stocks, especially for shares of multinationals. The Dollar Index dropped 0.5% this session, but it is still trading above its 2009 lows.

Commodities were helped considerably by the dollar’s decline. In turn, the CRB Commodity Index tacked on 1.3%. Gold was one of the best performing assets this session. It spiked to a record intraday high of $1045 per ounce, before it settled with a 2.2% gain at a record closing high of $1039.70 per ounce.

The dollar’s drop and gold’s gains helped materials stocks show leadership in the early going, but as the greenback pared its losses midsession and pulled the materials sector back from its near 3% gain, the broader market drifted off of its midday highs. A pullback by financials, which were leaders in the previous session, also undercut the broader market. Goldman Sachs (GS 186.98, +0.51) weighed considerably on the sector as participants pressured the stock in high volume.

However, the stock market was able to recover from the afternoon drift as materials stocks and financial stocks rebounded. Materials stocks settled with a 1.9% gain, while financials finished 1.2% higher.

After the close, YUM! Brands (YUM) reported third quarter earnings of $0.70 per share, which was $0.12 better than the First Call consensus. Revenue fell 2.3% to $2.78 billion, just under $2.79 billion consensus, but raised earnings guidance for fiscal year 2009 to $2.14, excluding non-recurring items, vs. the $2.13 consensus and up from the prior guidance of $2.10 per share.

All sectors were in positive territory, led by energy (+2.1%), materials (+1.9%) and consumer discretionary (+1.5%).

Futures are slightly lower after hours with S&P 500 futures 1.77 points below fair value of 1048.8 and Nasdaq 100 futures 2.8 points below fair value of 1701.

Companies trading higher in after hours in reaction to earnings: YUM +1.3%… Companies trading lower in after hours in reaction to earnings: CAR -9.3%… Companies trading lower in after hours in reaction to news: AAI -12.2% (announces an offering of $75 million of convertible senior notes and 9 mln shares of common stock); CAR -9.3% (announces a $250 mln sr notes offering); LINE -5.4% (announces it plans to make a public offering of 6 mln units of its limited liability company interests); SUN -2.5% (announces strategic actions to strengthen competitive position; idles Eagle Point refinery, reduces quarterly dividend to $0.15 per share).

Tomorrow morning, there is no economic data scheduled to be released before the open.