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Stocks Rally On Upbeat Batch Of U.S. Economic Data - U.S. Commentary

With upbeat U.S. economic data overshadowing lingering concerns about the financial situation in Europe, stocks showed a strong move to the upside during trading on Thursday. The markets benefited from broad based buying interest.

The major averages closed firmly in positive territory, just off their highs for the session. The Dow jumped 123.13 points or 1 percent to 12,904.08, the Nasdaq surged up 44.02 points or 1.5 percent to 2,959.85 and the S&P 500 soared 14.81 points or 1.1 percent to 1,358.04.

The rally on Wall Street came as traders reacted to the latest batch of U.S. economic data, including a report from Labor Department showing that jobless claims unexpectedly fell to a nearly four-year low in the week ended February 11th.

The report showed that jobless claims fell to 348,000 from the previous week's revised figure of 361,000. The drop surprised economists, who had expected jobless claims to increase to 365,000 from the 358,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since coming in at 347,000 in the week ended March 8, 2008.

A separate report from the Commerce Department showed that housing starts came in well above economist estimates in the month of January, although the increase was largely due to strength in the volatile multi-family home sector.

The Philadelphia Federal Reserve also released a report showing a continued expansion in regional manufacturing activity in the month of February, with the index of activity in the sector rising by more than anticipated.

The upbeat data offset the negative sentiment that was generated by news that Moody's warned that it may cut the credit ratings of 17 global and 114 European financial institutions.

Further buying interest was generated by a report from German newspaper Die Welt indicating that European central banks will complete an exchange of Greek government debt for new Greek bonds over the weekend.

Sector News

Most of the major sectors showed strong moves to the upside over the course of the trading day, reflecting the broad based buying interest.

Electronic storage stocks posted particularly strong gains, driving the NYSE Arca Disk Drive Index up by 4 percent to a six-month closing high. NetApp (NTAP) helped to lead the sector higher after reporting third quarter results that met estimates and providing healthy guidance for the fourth quarter.

Significant strength was also visible among trucking stocks, as reflected by the 3.4 percent gain posted by the Dow Jones Trucking Index. C.H. Robinson Worldwide (CHRW) and YRC Worldwide (YRCW) turned in two of the sector's best performances.

Gold stocks also saw considerable strength even as the price of the precious metal ended the day nearly flat. Software, semiconductor, airline, and banking stocks also posted standout gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the downside on Thursday amid worries about Europe. Japan's Nikkei 225 Index edged down by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day, closing nearly flat. While the French CAC 40 Index edged up by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index both slipped 0.1 percent.

In the bond market, treasuries saw notable weakness on the heels of the upbeat U.S. economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 6.2 basis points to 1.993 percent.

Looking Ahead

U.S. economic data will likely continue to attract attention on Friday, with reports on consumer prices and leading economic indicators due to be released. Nonetheless, traders are likely to keep a close eye on any developments in Europe.

by RTTNews Staff Writer

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