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Stocks Holding On To Gains In Mid-Day Trading - U.S. Commentary

Stocks remain mostly positive in mid-day trading on Thursday after showing a notable move to the upside early in the session. While buying interest has waned somewhat, the markets continue to benefit from some upbeat employment data.

The major averages are all in positive territory, the Dow just below the 13,000 level. The Dow is up 40.71 points or 0.3 percent at 12,992.78, the Nasdaq is up 18.56 points or 0.6 percent at 2,985.45 and the S&P 500 is up 7.16 points or 0.5 percent at 1,372.84.

Much of the strength on Wall Street stems from the release of a report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended February 25th.

The report showed that initial jobless claims edged down to 351,000 from the previous week's revised figure of 353,000. Economists had expected jobless claims to creep up to 355,000 from the 351,000 originally reported for the previous week.

With the drop compared to the previous week's revised figure, jobless claims matched the number seen in the week ended February 11th and are at their lowest level since coming at 347,000 in the week ended March 8, 2008.

The upbeat jobs data has largely overshadowed some other disappointing economic reports, including a report from the Institute for Supply Management showing an unexpected drop by its index of activity in the manufacturing sector.

The ISM said its manufacturing index dropped to 52.4 in February from 54.1 in January, although a reading above 50 indicates continued growth in the sector. The drop surprised economists, who had expected the index to inch up to a reading of 54.6.

Commenting on the data, James Knightley, senior economist at ING, said, "Given the better tone to confidence, employment and the regional manufacturing numbers, we believe today's outcome is a temporary setback and we will get a rise again next month."

Meanwhile, separate reports from the Commerce Department showed a smaller than expected increase in personal spending in January as well as an unexpected decrease in construction spending.

Positive news out of the auto sector may be helping to offset the disappointing economic data, with major automakers including General Motors (GM) reporting increases in auto sales in the month of February. GM reported a 1.1 percent increase in auto sales in February, surprising analysts.

Sector News

Banking stocks continue to turn in a strong performance in mid-day trading, with the KBW Bank Index up by 1.2 percent. With the gain, the index is poised to end the day at a seven-month closing high.

Financial giants JP Morgan (JPM) and Bank of America (BAC) are turning in two of the banking sector's best performances, advancing by 2.4 percent and 1.8 percent, respectively.

Significant strength is also visible among steel stocks, as reflected by the 2 percent gain being posted by the NYSE Arca Steel Index. Universal Stainless (USAP) and Timken (TKR) are posting notable gains on the day.

Trucking stocks have also shown a strong move to the upside on the day, driving the Dow Jones Trucking Index up by 1.6 percent. Brokerage, gold, and electronic storage stocks are also seeing considerable strength.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday after the lower close on Wall Street overnight. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index fell by 1.4 percent.

Meanwhile, the major European markets showed notable moves to the upside on the day. While the U.K.'s FTSE 100 Index rose by 1 percent, the German DAX Index and the French CAC 40 Index advanced by 1.3 percent and 1.4 percent, respectively.

In the bond market, treasuries have come under pressure, extending the downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.7 basis points at 2.054 percent.

by RTTNews Staff Writer

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