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Stocks Posting Strong Gains In Mid-Day Trading - U.S. Commentary

With traders shrugging off a disappointing jobs report, stocks have moved sharply higher over the course of the trading day on Thursday. Following yesterday's strong gains, the markets continue to recover from the sell-off seen earlier this week.

The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is up 144.52 points or 1.1 percent at 12,949.91, the Nasdaq is up 36.88 points or 1.2 percent at 3,053.34 and the S&P 500 is up 14.80 points or 1.1 percent at 1,383.51.

The rally on Wall Street comes in spite of the release of a report from the Labor Department showing a notable increase in initial jobless claims in the week ended April 7th.

The report showed that initial jobless claims rose to 380,000 from the previous week's revised figure of 367,000. Economists had expected jobless claims to edge up to 359,000 from the 357,000 originally reported for the previous week.

While the increase lifted jobless claims to their highest level since late January, economists noted that the numbers may have been skewed by the holiday weekend.

Meanwhile, a separate report from the Commerce Department showing a significantly narrower than expected U.S. trade deficit in February has generated positive sentiment, with the data suggesting that trade wasn't as big of a drag on first quarter GDP growth as previously anticipated.

The report showed that the trade deficit narrowed to $46.0 billion in February from $52.5 billion in January. Economists had been expected a trade deficit of about $51.7 billion.

Capital Economics raised its first quarter GDP growth estimate to 2.5 percent from 2.0 percent in response to the data.

Meanwhile, the Labor Department also released a report that producer prices unexpectedly came in unchanged in March amid a drop in energy prices.

The Labor Department said its producer price index was flat in March following a 0.4 percent increase in February. Economists had been expecting the index to increase by 0.3 percent.

Excluding food and energy prices, the core producer price index rose by 0.3 percent in March after edging up by 0.2 percent in February. The core index had been expected to increase by 0.2 percent.

In corporate news, shares of Sony (SNE) have moved modestly higher after the consumer electronics giant said it will cut about 10,000 jobs in fiscal 2012 as part of a turnaround plan.

Sector News

While most of the major sectors have moved to the upside on the day, resource stocks are posting particularly strong gains in mid-day trading.

Among resource stocks, steel stocks are seeing substantial strength, with the NYSE Arca Steel Index up by 4.4 percent. Strong gains by A.M. Castle (CAS) and Mechel (MTL) have helped to lift the index further off the three-month closing low that it set on Tuesday.

Gold stocks have also moved sharply higher over the course of the trading, driving the NYSE Arca Gold Bugs Index up by 3.9 percent. The gains by gold stocks come amid an increase by the price of the precious metal, with gold for June delivery climbing $14.10 to $1,674.40 an ounce.

Significant strength has also emerged among transportation stocks, as reflected by the 2.3 percent gain being posted by the Dow Jones Transportation Average. Delta Air Lines (DAL), Con-Way (CNW), and Kansas City Southern (KSU) are turning in some of the sector's best performances.

Chemical, healthcare, semiconductor, and telecom stocks are also posting notable gains amid broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, benefiting from the overnight rebound on Wall Street. Japan's Nikkei 225 Index rose by 0.7 percent, while Hong Kong's Hang Seng Index ended the day up by 0.9 percent.

The major European markets also moved to the upside on the day amid some volatility. While the U.K.'s FTSE 100 Index advanced by 1.3 percent, the German DAX Index and the French CAC 40 Index both closed up by 1 percent.

In the bond market, treasuries have turned lower over the course of the session after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.5 basis points at 2.053 percent after hitting a low of 2.012 percent.

by RTTNews Staff Writer

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