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Stocks Close Firmly In Positive Territory - U.S. Commentary

4/26/2012 4:34 PM ET

Stocks moved mostly higher over the course of the trading day on Thursday, adding the gains posted in the previous session. The markets benefited from upbeat housing data, which helped to overshadow another disappointing jobs report.

The major averages pulled back off their best levels going into the close but still ended the day firmly positive. The Dow rose 113.90 points or 0.9 percent to 13,204.62, the Nasdaq climbed 20.98 points or 0.7 percent to 3,050.61 and the S&P 500 advanced 9.29 points or 0.7 percent to 1,399.98.

The strength on Wall Street was partly due to the release of a report from the National Association of Realtors showing a much bigger than expected increase in pending home sales in the month of March.

Calling the data another signal that the housing market is recovering, NAR said its pending home sales index rose by 4.1 percent in March following a revised 0.4 percent increase in February. Economists had expected a much more modest 1.0 percent increase.

A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The upbeat data helped to offset the negative sentiment generated by a report from the Labor Department showing a much smaller than expected drop in initial jobless claims in the week ended April 21st.

The report showed that jobless claims edged down to 388,000 from the previous week's revised figure of 389,000. Economists had been expecting jobless claims to fall to 375,000 from the 386,000 originally reported for the previous week.

Traders also digested the latest batch of earnings news, with share of Xilinx (XLNX) rising by 6.8 percent after the programmable computer chip maker reported better than expected fourth quarter results and provided upbeat first quarter revenue guidance.

Tyco International (TYC) also ended the day higher after reporting second quarter results that exceeded analyst estimates. The company also said its plan to split itself into three separate companies remains on track for completion at the end of September

On the other hand, UPS (UPS) fell by 1.8 percent after the delivery giant reported first quarter earnings that rose year-over-year but came in below analyst estimates.

Shares of Exxon Mobil (XOM) also closed in the red after the oil giant reported first quarter earnings that fell by more than analysts had anticipated. Meanwhile, the company also announced a 21 percent increase in its second quarter dividend.

Sector News

Housing stocks showed a substantial upward move on the day, benefiting from the upbeat pending home sales data. The Philadelphia Housing Sector Index surged up by 3 percent to its best closing level in almost a month.

Within the housing sector, Ryland Group (RYL), PulteGroup (PHM), and M/I Homes (MHO) all posted strong gains after reporting their quarterly results.

Significant strength also emerged among semiconductor stocks, as reflected by the 2.2 percent gain posted by the Philadelphia Semiconductor Index. Cirrus Logic (CRUS) helped to lead the sector higher after reporting better than expected fourth quarter earnings.

Oil stocks also saw considerable strength, resulting in a 1.6 percent gain by the NYSE Oil Index. An increase by the price of crude oil contributed to the strength in the sector, which came despite Exxon's disappointing earnings news.

Brokerage, tobacco, and biotech stocks also showed strong moves to the upside, while weakness was visible among trucking, health insurance, and networking stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed modestly higher on Thursday. Japan's Nikkei 225 Index closed just above the unchanged line, while Australia's All Ordinaries Index crept up by 0.3 percent. Hong Kong's Hang Seng Index advanced by a more notable 0.8 percent.

Meanwhile, the major European markets turned mixed over the course of the trading day. While the French CAC 40 Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index both ended the day up by 0.5 percent.

In the bond market, treasuries regained some ground after closing lower in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to 1.959 percent.

Looking Ahead

Trading on Friday is likely to be impacted by reaction to the Commerce Department's preliminary report on first quarter GDP. Economists expect GDP to increase by 2.5 percent compared to the 3.0 percent growth seen in the fourth quarter.

Reuters and the University of Michigan are also scheduled to release their revised report on consumer sentiment in the month of April.

On the earnings front, Chevron (CVX), Ford (F), Merck (MRK), and Procter & Gamble (PG) are among the companies scheduled to release their quarterly results before the start of trading on Friday.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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