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Modest Strength On Wall Street Lifts S&P 500 To Record High - U.S. Commentary


After initially showing a lack of direction, stocks moved mostly higher over the course of the trading day on Thursday. The moderate strength on the day lifted the S&P 500 to a new record closing high.

The major averages continued to perform well going into the close, ending the day firmly in positive territory. The Dow climbed 52.38 points or 0.4 percent to 14,578.54, the Nasdaq edged up 11.00 points or 0.3 percent to 3,267.52 and the S&P 500 rose 6.34 points or 0.4 percent to 1,569.19.

With the gains on the day, the major averages all moved to the upside for the week. The Dow rose by 0.5 percent, while the Nasdaq and the S&P 500 advanced by 0.7 percent and 0.8 percent, respectively.

The strength that emerged on Wall Street was partly due to the recent upward momentum for the markets, with traders showing continued buying interest despite recent concerns about the sequester and the situation in Cyprus.

Some traders may have used the lack of trading activity ahead of the holiday weekend as an opportunity to push the S&P 500 to a new record closing high after it encountered resistance in recent sessions.

Positive sentiment was also generated by news that the re-opening of banks in Cyprus was met with relative calm, with strict restrictions on transactions helping to prevent a panic.

Traders were also presented with a mixed batch of U.S. economic data, including an upwardly revised fourth quarter GDP report and a disappointing jobs report.

Before the start of trading, the Commerce Department released a report showing that economic activity in the final three months of 2012 increased at a faster rate than previously estimated.

The Commerce Department said GDP increased at an annual rate of 0.4 percent in the fourth quarter compared to the previously reported 0.1 percent increase.

Meanwhile, the Labor Department released a report showing a bigger than expected increase in initial jobless claims in the week ended March 23rd.

The report showed that initial jobless claims rose to 357,000, an increase of 16,000 from the previous week's revised figure of 341,000. Economists had expected jobless claims to edge up to 340,000 from the 336,000 originally reported for the previous week.

The Institute for Supply Management - Chicago also released a report showing that its business barometer fell to 52.4 in March from 56.8 in February, indicating a slowdown in the pace of growth in Chicago-area business activity.

Nonetheless, trading activity remained somewhat subdued, as some traders look to get a head start on the three-day weekend.

Sector News

Despite the upward move by the broader markets, most of the major sectors ended the day showing only modest moves.

Railroad stocks saw considerable strength, however, with the Dow Jones Railroads Index advancing by 1.3 percent. The gain lifted to a new record closing high.

Greenbrier (GBX) helped to lead the railroad sector higher, with the railroad freight car manufacturer surging up by 6.5 percent after announcing new orders for 5,400 railcars valued at approximately $575 million.

Significant strength was also visible among biotech stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Biotechnology Index, which also reached a record closing high. Biogen Idec (BIIB) posted a notable gain after the FDA approved the company's multiple sclerosis drug.

Utilities, software, and pharmaceutical stocks also moved to the upside on the day, although buying interest was somewhat subdued.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while Hong Kong's Hang Seng Index ended the day down by 0.7 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index edged up by 0.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.852 percent.

Looking Ahead

Following the holiday weekend, the Labor Department's monthly employment report is likely to take center stage next week.

Ahead of the release of the jobs report next Friday, trading could be impacted by the release of reports on manufacturing and service sector activity, construction spending, and factory orders.

Traders are also likely to keep an eye on the European Central Bank's announcement of its latest monetary policy decision next Thursday.

by RTTNews Staff Writer

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