U.S. equity markets turned around late in the trading session after investors determined that the new regulatory overhaul plan for Wall Street was not as restrictive as previously thought.

Earlier in the session, equity markets were under pressure, led by falling oil and bank stocks. The weakness initially began overnight with heavy Asian selling on concerns that China would begin another round of monetary policy tightening. Energy stocks were down because of the drop in crude oil. Bank stocks felt pressure because of the introduction of the new financial market regulatory proposal.

The rising Dollar also hurt demand for higher risk assets such as equities. The strength in the Dollar was attributed to weakness in the Euro and British Pound. The Euro saw pressure on speculation that a bailout plan for Greece had stalled. The British Pound was down on concerns over a possible debt rating cut.

Trader demand for safety helped to underpin the June Treasury Bonds earlier in the session but gains were quickly erased as buying failed to surface after the stock market opened. The drop in demand for higher risk assets should’ve driven investors into the safety of the Treasuries, but this did not happen, causing traders to pull bids. For the most part, it looked as if the volume was down because of tomorrow’s FOMC meeting.

April Gold had a see-saw day, but eventually finished higher. The stronger Dollar was not much of an influence on the direction of gold today. This was most likely an indication that investors were becoming concerned about the possibility of a sharp sell-off in the British Pound. The threat of a downgrade from Moody’s pressured the Pound and raised concerns about its ability to cover the servicing of its sovereign debt. Investor concerns that both the Pound and the Euro are in trouble may lead traders to seek safety in hard assets rather than paper money.

June Crude Oil finished sharply lower. A drop in demand for higher risk assets helped trigger the weakness. Friday’s closing price reversal top was confirmed, helping to accelerate this market to the downside. Speculation that China may begin another round of tightening also helped to pressure the market. On-going downside pressure could help to drive this market down to a 50% level at 77.28 over the near-term.