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U.S. Stocks Rally To New Record Highs On Upbeat Economic Data

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Stocks moved sharply higher over the course of the trading session on Thursday, adding to the modest gains posted in the previous session. With the continued upward move, the major averages climbed to new record closing highs.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 267.42 points or 0.9 percent to 29,297.64, the Nasdaq spiked 98.44 points or 1.1 percent to 9,357.13 and the S&P 500 surged up 27.52 points or 0.8 percent to 3,316.81.

The markets continued to benefit from recent upward momentum following the official signing of the U.S.-China phase one trade deal on Wednesday.

The deal did not address some major issues and leaves significant tariffs in place, but the agreement has still helped lift some of the uncertainty generated by the trade war between the two economic superpowers.

A batch of largely upbeat U.S. economic data also contributed to the buying interest, with a report from the Labor Department showing an unexpected decrease in initial jobless claims in the week ended January 11th.

The Labor Department said initial jobless claims fell to 204,000, a decrease of 10,000 from the previous week's unrevised level of 214,000. The drop came as a surprise to economists, who had expected jobless claims to inch up to 216,000.

The Commerce Department also released a report showing U.S. retail sales rose in line with economist estimates in the month of December, with a sharp pullback in auto sales more than offset by strength in other areas.

The report said retail sales climbed by 0.3 percent in December, matching the upwardly revised increase in November.

Economists had expected retail sales to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Excluding auto sales, retail sales increased by 0.7 percent in December after coming in unchanged in November. Ex-auto sales had been expected to climb by 0.5 percent.

The Philadelphia Federal Reserve also released a report showing a substantial acceleration in the pace of growth in regional manufacturing activity in the month of January.

Meanwhile, the National Association of Home Builders released a report showing a slight pullback in homebuilder confidence in January, although confidence remains at an elevated level.

The report said the NAHB/Wells Fargo Housing Market Index edged down to 75 in January after jumping to 76 in December.

The modest decrease, which matched economist estimates, came after the index reached its highest level since June of 1999 in the previous month.

Sector News

Brokerage stocks showed a substantial move to the upside on the day, driving the NYSE Arca Broker/Dealer Index up by 2.2 percent to a record closing high.

Morgan Stanley (MS) led the sector higher after reporting fourth quarter earnings that exceeded expectations on revenues that came in well above estimates.

Significant strength also emerged among semiconductor stocks, as reflected by the 1.7 percent gain posted by the Philadelphia Semiconductor Index. The index also reached a new record closing high.

Tobacco, computer hardware, and software stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index inched up by 0.1 percent and Hong Kong's Hang Seng Index rose by 0.4 percent, although China's Shanghai Composite Index bucked the uptrend and slid by 0.5 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index inched up by 0.1 percent, the German DAX Index closed just below the unchanged line and the U.K.'s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries gave back ground back trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 1.809 percent.

Looking Ahead

Trading on Friday may be impacted by another slew of U.S. economic data, including reports on housing starts, industrial production and consumer sentiment.

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