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Stocks Manage To End Choppy Trading Day Modestly Higher - U.S. Commentary


After turning in a lackluster performance throughout much of the session, stocks ended Thursday's trading modestly higher. While a positive reaction to new Japanese monetary policy generated buying interest, disappointing U.S. jobs data limited the upside for the markets.

The major averages ended the day in positive territory, partly offsetting the steep losses posted on Wednesday. The Dow rose 55.76 points or 0.4 percent to 14,606.11, the Nasdaq edged up 6.38 points or 0.2 percent to 3,224.98 and the S&P 500 climbed 6.29 points or 0.4 percent to 1,559.98.

The modest strength on Wall Street was partly due to news of the quantitative and qualitative easing measures announced by the Bank of Japan's new Governor Haruhiko Kuroda.

The measures include doubling monthly Japanese government bond purchases, lengthening the maturity of bonds and replacing the main operating target of the overnight call rate with a monetary base target.

"Headed by the new governor Haruhiko Kuroda, the Japanese central bank eased monetary policy massively today," said Dr. Marco Wagner, an economist with Commerzbank. "The plethora of monetary measures has exceeded market expectations."

However, buying interest was kept in check by the release of a report from the Labor Department showing an unexpected increase in initial jobless claims.

The Labor Department said initial jobless claims rose to 385,000 in the week ended March 30th, an increase of 28,000 from the previous week's unrevised figure of 357,000. The continued increase in jobless claims came as a surprise to economists, who had expected claims to edge down to 350,000.

With the unexpected increase, jobless claims rose to their highest level since coming in at 390,000 in the week ended November 24, 2012.

Jennifer Lee, senior economist at BMO Capital, said, "The weekly data are volatile but this latest jump erased all of the improvement over the past few months."

While the latest weekly jobless claims data reflects distortions due to the Easter holiday, the report still added to concerns about tomorrow's monthly jobs report.

The report from the Labor Department is expected to show an increase of about 193,000 jobs in March compared to the addition of 236,000 jobs in February. The unemployment rate is expected to remain unchanged at 7.7 percent.

Uncertainty about the monthly jobs report kept some traders on the sidelines, leading to choppy trading for most of the day.

Sector News

While many of the major sectors ended the day showing only modest moves, considerable strength was visible among gold stocks. The NYSE Arca Gold Bugs Index surged up by 2.4 percent after ending the previous session at its worst closing level in well over three years.

The rebound by gold stocks came as the price of the precious metal climbed well off its worst levels of the day. Gold for June delivery ended the day down $1.10 at $1,552.40 an ounce but was well off its low of $1,539.40 an ounce.

Airline stocks also showed a strong move back to the upside following recent weakness, with the NYSE Arca Airline Index advancing by 2 percent. The gain by the index came after it fell to a monthly closing low on Wednesday.

Tobacco, commercial real estate and semiconductor stocks also saw some strength on the day, while Greenbrier (GBX) helped to lead the railroad sector lower after reporting weaker than expected second quarter revenues.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mixed yet again on Thursday. While Japan's Nikkei 225 Index surged up by 2.2 percent, Australia's All Ordinaries Index ended the day down by 1 percent.

Meanwhile, the major European markets all moved to the downside over the course of the session. The U.K.'s FTSE 100 Index tumbled by 1.2 percent, while the French CAC 40 Index and the German DAX Index fell by 0.8 percent and 0.7 percent, respectively.

In the bond market, treasuries extended their recent upward move on the heels of the disappointing jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.3 basis points to 1.759 percent.

Looking Ahead

The Labor Department's monthly employment report is likely to be in focus on Friday, although the Commerce Department is also scheduled to release its report on the U.S. trade balance.

by RTTNews Staff Writer

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