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Nasdaq, S&P Extend Rally But Dow Posts Modest Loss - U.S. Commentary


Following the rally seen over the course of the previous session, stocks saw some further upside during trading on Thursday. While the Dow bucked the uptrend, the broader Nasdaq and the S&P 500 climbed firmly into positive territory.

The Nasdaq surged up 98.66 points or 1.4 percent to 7,281.74 and the S&P 500 advanced 23.05 points or 0.9 percent to 2,704.10, with both indexes reaching their best closing levels in nearly two months. On the other hand, the Dow edged down 15.19 points or 0.1 percent to 24,999.67.

A steep drop by shares of DowDuPont (DWDP) weighed on the Dow, with the chemical giant plunging by 9.2 percent after reporting fourth quarter earnings in line with estimates but on weaker than expected revenues.

Software giant Microsoft (MSFT) also ended the day lower after reporting fiscal second quarter revenues that missed estimates.

On the other hand, the tech-heavy Nasdaq benefited from a sharp jump by shares of Facebook (FB), with the social giant spiking by 10.8 percent after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

General Electric (GE) also posted a standout gain after the conglomerate reported fourth quarter earnings that missed analyst estimates but better than expected revenues.

GE also announced a $1.5 billion settlement with the Justice Department related to its now-defunct subprime mortgage business WMC, consistent with the prior reserve for the matter.

In economic news, the Labor Department released a report showing a significant rebound in initial jobless claims in the week ended January 26th.

The report said initial jobless claims surged up to 253,000, an increase of 53,000 from the previous week's revised level of 200,000. Economists had expected jobless claims to rise to 215,000.

With the much bigger than expected increase, jobless claims reached their highest level since hitting 254,000 in September of 2017.

The slightly upwardly revised reading on jobless claims in the previous week was still the lowest since a matching figure in October of 1973.

Meanwhile, a separate report from the Commerce Department showed new home sales rebounded by much more than anticipated in November.

The report released Thursday showed new home sales soared by 16.9 percent to an annual rate of 657,000 in November after plunging by 8.3 percent to a revised rate of 562,000 in October.

Economists had expected new home sales to rise to a rate of 560,000 from the 544,000 originally reported for the previous month.

Sector News

Tobacco stocks showed a substantial move to the upside on the day, extending the rally seen over the course of the previous session.

Reflecting the strength in the sector, the NYSE Arca Tobacco Index surged up by 2.6 percent to its best closing level in nearly two months.

Considerable strength also emerged among interest rate-sensitive utilities stocks, as reflected by the 2.1 percent spike by the Dow Jones Utilities Average.

Gold stocks also saw significant strength, benefiting from a continued increase by the price of the precious metal. With gold for April delivery climbing $9.70 to $1,325.20 an ounce, the NYSE Arca Gold Bugs Index jumped by 2 percent.

Telecom, housing, and pharmaceutical stocks also moved notably higher on the day, while weakness was visible among chemical and energy stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday despite disappointing Chinese manufacturing data. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both shot up by 1.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index edged down by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both rose by 0.4 percent.

In the bond market, treasuries moved notably higher, extending the upward move seen late in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid by 6 basis points to 2.635 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department's closely watched monthly employment report.

Employment is expected to rise by 165,000 jobs in January after spiking by 312,000 jobs in December, while the unemployment rate is expected to hold at 3.9 percent.

The jobs data is likely to overshadow separate reports on manufacturing activity and consumer sentiment as well as the release of delayed data on construction spending and wholesale inventories.

Earnings news will also attract attention, with online retail giant Amazon (AMZN) among the companies releasing their quarterly results after the close of today's trading.

Exxon Mobil (XOM), Chevron (CVX), Merck (MRK), Honeywell (HON), and Sony (SNE) are also among the companies due to report their results before the start of trading on Friday.

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