Stocks moved mostly higher over the course of the trading day on Thursday after initially showing a lack of direction. The markets benefited from a positive reaction to quarterly results from Cisco (CSCO: Quote) as well as remarks by German Chancellor Angela Merkel.
The major averages pulled back off their highs going into the close but remained firmly positive. The Dow rose 85.33 points or 0.7 percent to 13,250.11, the Nasdaq jumped 31.46 points or 1 percent to 3,062.39 and the S&P 500 advanced 9.98 points or 0.7 percent to 1,415.51.
With the gains on the day, the major averages broke out of the narrow range seen over the past week. The Dow and the Nasdaq reached new three-month closing highs, while the S&P 500 rose to its best closing level in over four months.
Technology stocks helped to lead the way higher following the release of quarterly results from networking giant Cisco, which surged up by 9.6 percent on the day.
After the close of trading on Wednesday, Cisco reported better than expected fourth quarter adjusted earnings. The company also announced a 75 percent increase in its quarterly dividend to $0.14 per share.
The strength that emerged on Wall Street was also partly due to remarks by German Chancellor Angela Merkel, who said that Germany is committed to doing everything it can to maintain the euro.
"The European Central Bank, although it is of course independent, is completely in line with what we have said all along," Merkel added at a press conference with Canadian Prime Minister Stephen Harper.
Meanwhile, traders also digested another mixed batch of U.S. economic data, including a report from the Commerce Department showing a drop in housing starts but a substantial increase in building permits.
The report showed that housing starts fell 1.1 percent to an annual rate of 746,000 in July from the revised June estimate of 754,000. Economists had expected housing starts to dip to 750,000 from the 760,000 originally reported for the previous month.
At the same time, the Commerce Department said building permits surged up by 6.8 percent to an annual rate of 812,000 in July from the revised June rate of 760,000. Building permits are seen as an indicator of future housing activity.
A separate report from the Labor Department showed that initial jobless claims came in slightly higher than anticipated in the week ended August 11th, although the less volatile four-week moving average fell to its lowest level in over four months.
The Philadelphia Federal Reserve also released a report showing that its index of regional manufacturing increased in August compared to the previous month but remained in negative territory for the fourth consecutive month. A negative reading indicates a contraction in regional manufacturing activity.
In other news, shares of Wal-Mart (WMT: Quote) fell by 3.1 percent after the retail giant reported second quarter earnings that exceeded analyst estimates but on weaker than expected revenues. Looking ahead, the company raised its full-year earnings guidance.
Most of the major sectors moved to the upside on the day, with electronic storage stocks posting particularly strong gains. Reflecting the strength in the storage sector, the NYSE Arca Disk Drive Index surged up by 3.8 percent to its best closing level in well over three months.
Housing stocks also moved sharply higher on the heels of the building permits data, driving the Philadelphia Housing Sector Index up by 3.6 percent. With the gain, the index reached a nearly four-year closing high.
Significant strength also emerged among gold stocks, which moved higher along with the price of the precious metal. With gold for December delivery climbing $12.60 to $1,619.20 an ounce, the NYSE Arca Gold Bugs Index rose by 3.4 percent.
Networking stocks also saw considerable strength following the news from Cisco, with the NYSE Arca Networking Index jumping by 3 percent. Software, steel, semiconductor, and oil service stocks also posted notable gains.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. Japan's Nikkei 225 Index surged up by 1.9 percent, while Hong Kong's Hang Seng Index ended the day down by 0.5 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index closed just above the unchanged line, the German DAX Index and the French CAC 40 Index advanced by 0.7 percent and 0.9 percent, respectively.
In the bond market, treasuries moved moderately lower after showing a lack of direction in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to a new three-month closing high of 1.836 percent.
Following the slew of U.S. economic data released over the past two days, the economic calendar for Friday is relatively light. Nonetheless, traders are likely to keep an eye on reports on consumer sentiment and leading economic indicators.
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by RTT Staff Writer
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