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Stocks Extend Upward Trend On Upbeat Jobs Data - U.S. Commentary


With upbeat employment generating continued buying interest, stocks moved mostly higher over the course of the trading day on Thursday. The gains extended a recent upward move by the markets, with the Dow closing higher for the tenth consecutive session.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow rose 83.86 points or 0.6 percent to 14,539.14, the Nasdaq climbed 13.81 points or 0.4 percent to 3,258.93 and the S&P 500 advanced 8.71 points or 0.6 percent to 1,563.23.

The strength on Wall Street came following the release of a report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended March 9th.

The report showed that initial jobless claims fell to 332,000, a decrease of 10,000 from the previous week's revised figure of 342,000.

The drop came as a surprise to economists, who had expected jobless claims to rise to 350,000 from the 340,000 originally reported for the previous week.

The data added to recent optimism about the labor market following last week's better than expected monthly jobs report, which showed continued job growth pushing the unemployment rate down to a four-year low in February.

"Claims are now inside the 300-335k range that was the low during the 2001-07 expansion," said Chris Low, chief economist at FTN Financial. "There is still room for claims to drop, but the rate of decline is likely to slow as it did in 2004."

"That does not mean the economy cannot keep growing, of course," he added. "In fact, if things go right, an increasing number of companies should transition from slower layoffs to faster hires."

Traders also digested a separate report from the Labor Department showing that producer prices rose by slightly more than expected in February amid a jump in energy prices.

The Labor Department said its producer price index rose by 0.7 percent in February after edging up by 0.2 percent in January. Economists had expected producer prices to increase by 0.6 percent.

Excluding the jump in energy prices and a drop in foods prices, the core producer price index inched up by 0.2 percent in February, matching the increase seen in the previous month and economist estimates.

Sector News

Natural gas stocks turned in some of the market's best performances on the day, resulting in a 2.2 percent gain by the NYSE Arca Natural Gas Index. With the gain, the index ended the session at its best closing level in well over four years.

The strength among natural gas stocks came amid an increase by the price of natural gas, with natural gas for April delivery climbing $0.132 or 3.6 percent to $3.812 per million BTUs.

Significant strength was also visible among housing stocks, as reflected by the 1.5 percent gain posted by the Philadelphia Housing Sector Index. Ryland Group (RYL) and PulteGroup (PHM) posted strong gains.

Oil service stocks also saw considerable strength, moving higher along with the price of crude oil. With crude for April delivery rising $0.51 to $93.03 a barrel, the Philadelphia Oil Service Index ended the day up by 1.5 percent.

Healthcare provider, computer hardware, and railroad stocks also posted notable gains, moving higher along with most of the major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index surged up by 1.2 percent, while Australia's All Ordinaries Index fell by 1.2 percent.

Meanwhile the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.7 percent, the French CAC 40 Index advanced by 0.9 percent and the German DAX Index jumped by 1.1 percent.

In the bond market, treasuries recovered from an early move to the downside but still ended the day modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.2 basis points to 2.033 percent after reaching a high of 2.068 percent.

Looking Ahead

Trading on Friday could be impacted by the release of another batch of economic data, including reports on consumer prices, industrial production, and consumer sentiment.

by RTTNews Staff Writer

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