After moving mostly higher over the course of morning trading on Thursday, stocks saw considerable volatility in the final hour of trading. The markets managed to end the day on the upside amid optimism about the likelihood of further stimulus.
The major averages all ended the day in positive territory, offsetting the losses posted in the previous session. The Dow jumped 155.53 points or 1.2 percent to 12,651.91, the Nasdaq rose 17.72 points or 0.6 percent to 2,836.33 and the S&P 500 climbed 14.22 points or 1.1 percent to 1,329.10.
The volatility seen in the latter part of the trading day came on the heels of a report from Reuters indicating that central banks from major economies are prepared to take necessary steps to stabilize the financial markets after the Greek elections on Sunday.
"The central banks are preparing for coordinated action to provide liquidity," Reuters quoted a senior G20 aide familiar with discussions among international financial diplomats as saying.
Traders also reacted to remarks by U.K. Chancellor George Osborne, who said the U.K. Treasury and the Bank of England will take "coordinated action" to protect the economy from the eurozone crisis.
Earlier in the day, the markets benefited from a positive reaction to a report from the Labor Department showing an unexpected increase in initial jobless claims in the week ended June 9th.
The report showed that jobless claims rose to 386,000 from the previous week's revised figure of 380,000, while economists had expected jobless claims to edge down to 375,000 from the 377,000 originally reported for the previous week.
While the report points to continued sluggishness in the labor market, the data led to optimism regarding the likelihood of further stimulus from the Federal Reserve.
A separate report from the Labor Department showed that consumer prices fell by 0.3 percent in May after coming in unchanged in April. The slightly steeper than expected drop was largely due to a 4.3 percent decrease in energy prices.
Core consumer prices, which exclude food and energy prices, rose by 0.2 percent in May, matching the increases seen in the two previous months and coming in line with estimates.
Rob Carnell, chief international economist at ING, said, "The fall in consumer prices will eventually provide a boost to both the household and corporate sectors, as it stems from lower fuel costs."
"But it may be several months before we start to see some evidence of the power of low fuel prices in other activity data," he added.
Traders also digested news that Moody's cut its rating on Spanish government debt three notches to Baa3 from A3, driving Spanish bond yields to euro-era record highs.
In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Thursday. Japan's Nikkei 225 Index edged down by 0.2 percent, while Hong Kong's Hang Seng Index tumbled by 1.2 percent.
Meanwhile, the major European markets ended the day mixed after seeing weakness for most of the session. While the French CAC 40 Index crept up by 0.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index edged down by 0.2 percent and 0.3 percent, respectively.
In the bond market, treasuries closed modestly lower after turning in a strong performance on Wednesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.2 basis points to 1.611 percent.
Housing stocks saw considerable strength on the day, resulting in a 2.9 percent gain by the Philadelphia Housing Sector Index. M/I Homes (MHO) posted a standout gain, rising by 8.4 percent after ending the previous session at its worst closing level in over a month.
Significant strength was also visible among natural gas stocks, which moved higher along with the price of natural gas. With natural gas for July delivery jumping $0.31 to $2.495 per million BTUs, the NYSE Arca Natural Gas Index advanced by 2.4 percent.
Biotechnology stocks also moved sharply higher on the day, driving the NYSE Arca Biotechnology Index up by 2.1 percent. InterMune (ITMN), Dendreon (DNDN), and Nektar Therapeutics (NKTR) turned in some of the sector's best performances.
Tobacco, health insurance, commercial real estate, and banking stocks also posted notable gains, moving higher along with most of the major sectors.
Trading activity on Friday may be somewhat subdued amid uncertainty about the outcome of the weekend's elections in Greece.
Nonetheless, trading could be impacted by the release of U.S. reports on industrial production, consumer sentiment, and New York manufacturing activity.
by RTT Staff Writer
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