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Dow Reaches Six-Month Closing High But Nasdaq Nearly Flat - U.S. Commentary

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Extending the lackluster performance seen in the previous session, stocks continued to show a lack of direction over the course of the trading day on Thursday. The major averages once again spent the day bouncing back and forth across the unchanged line.

At the end of the day, the major averages were all in positive territory, although the Nasdaq inched up just 1.98 points or less than a tenth of a percent to 7,998.06. The Dow climbed 110.00 points or 0.4 percent to a six-month closing high of 26,559.54 and the S&P 500 rose 4.58 points or 0.2 percent to 2,905.03.

For the holiday-shortened week, the Dow advanced by 0.6 percent and the Nasdaq edged up by 0.2 percent, while the S&P 500 dipped by 0.1 percent.

The choppy trading on Wall Street came as traders remained reluctant to make significant moves going into the long Easter weekend.

Traders were also looking ahead to the slew of quarterly earnings news scheduled to be released next week as earnings season continues to pick up steam.

Coca-Cola (KO), Procter & Gamble (PG), Boeing (BA), Facebook (FB), Microsoft (MSFT), Amazon (AMZN), Intel (INTC), and Exxon Mobil (XOM) are just a few of the big-name companies due to report their results.

Initial buying interest was generated by upbeat economic data, although buying interest waned shortly after the open amid lingering concerns about the strength of the economy going forward.

Before the start of trading, the Commerce Department released report showing retail sales rebounded by much more than expected in the month of March.

The Commerce Department said retail sales soared by 1.6 percent in March after edging down by 0.2 percent in February. Economists had expected retail sales to climb by 0.9 percent.

Excluding a jump in sales by motor vehicle and parts dealers, retail sales still surged up by 1.2 percent in March following a revised 0.2 percent dip in February.

Ex-auto sales had been expected to increase by 0.7 percent compared to the 0.4 percent drop originally reported for the previous month.

The report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, also jumped by 1.0 percent in March after falling by 0.3 percent in February.

"Overall, the retail sales figures add to the slightly more positive tone of the recent data and provide some comfort that the economy isn't falling off a cliff," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "But they don't change our view that the fading of the fiscal boost and the lagged impact of the Fed's monetary tightening will push GDP growth below its 2% potential pace over the coming quarters."

A separate report from the Labor Department showed initial jobless claims unexpectedly edged lower in the week ended April 13th, falling to a nearly 50-year low.

The report said initial jobless claims dipped to 192,000, a decrease of 5,000 from the previous week's revised level of 197,000. Economists had expected jobless claims to rise to 205,000.

With the unexpected decrease, initial jobless claims dropped to their lowest level since hitting 182,000 in September of 1969.

Sector News

Most of the major sectors ended the day showing only modest moves, although substantial weakness remained visible among tobacco stocks.

Reflecting the weakness in the sector, the NYSE Arca Tobacco Index tumbled by 2.1 percent to a two-month closing low.

Gold stocks also saw considerable weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 1.9 percent. The weakness in the sector came as the price of gold for June delivery edged down $0.80 to $1,276 an ounce.

Natural gas and oil service stocks also showed notable moves to the downside, while some strength emerged among commercial real estate and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index slid by 0.8 percent, while China's Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index dipped by 0.2 percent, the French CAC 40 Index rose by 0.3 percent and the German DAX Index climbed by 0.6 percent.

In the bond market, treasuries moved to the upside after ending the previous session roughly flat. As a result, the yield on benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 2.560 percent.

Looking Ahead

Earnings news is likely to return to the spotlight following the long holiday weekend, with a slew of big-name companies due to report their quarterly results next week.

Next week's trading could also be impacted by reaction to reports on new and existing home sales, durable goods orders and first quarter GDP.

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