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Nasdaq Closes Sharply Higher, Dow Posts Modest Gain

wallstreet aug14 01oct20 lt

Stocks moved mostly higher during trading on Thursday, adding to the gains posted in the previous session. The tech-heavy Nasdaq moved sharply higher on the day, while the Dow fluctuated over the course of the session.

The Nasdaq surged up 159.00 points or 1.4 percent to 11,326.51, its best closing level in nearly a month. The Dow posted a more modest gain, inching up 35.20 points or 0.1 percent to 27,816.90, while the S&P 500 climbed 17.80 points or 0.5 percent at 3,380.80.

The strength on Wall Street came as traders continued to express optimism lawmakers will ultimately reach a deal on a new coronavirus relief bill.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continue to work toward a potential agreement, although a spokesman for the Democratic leader noted "distance on key areas remain."

Early buying interest was generated in reaction to news that House Democrats delayed a vote on their coronavirus relief package in order to provide more time for an agreement to be reached.

However, the positive sentiment was partly offset after House Majority Leader Steny Hoyer's office indicated the House is expected to vote on the Democrats' bill later today.

On the U.S. economic front, the Labor Department released a report showing a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended September 26th.

The report said initial jobless claims fell to 837,000, a decrease of 36,000 from the previous week's revised level of 873,000.

Economists had expected jobless claims to dip to 850,000 from the 870,000 originally reported for the previous week.

Meanwhile, the Commerce Department released a separate report showing a steep drop in U.S. personal income in the month of August, with the sharp pullback reflecting a decrease in unemployment insurance benefits.

The Commerce Department said personal income tumbled by 2.7 percent in August after rising by an upwardly revised 0.5 percent in July.

Economists had expected personal income to slump by 2.5 percent compared to the 0.4 percent increase originally reported for the previous month.

At the same time, the report said personal spending climbed by 1.0 percent in August after jumping by a downwardly revised 1.5 percent in July.

Personal spending was expected to increase by 0.8 percent compared to the 1.9 percent spike originally reported for the previous month.

The Institute for Supply Management also released a report unexpectedly showing a modest slowdown in the pace of growth in manufacturing activity in the month of September.

The ISM said its purchasing managers index edged down to 55.4 in September after rising to 56.0 in August. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to inch up to 56.3.

Sector News

Semiconductor stocks moved sharply higher over the course of the trading session, driving the Philadelphia Semiconductor Index up by 2.1 percent. The index ended the session at its best closing level in nearly a month.

Significant strength was also visible among stocks, as reflected by the 2 percent jump by the Dow Jones U.S. Retail Index, which also reach a nearly one-month closing high.

Airline stocks also turned in a strong performance on the day, resulting in a 1.8 percent advance by the NYSE Arca Airline Index.

Commercial real estate, housing and software stocks also moved notably higher on the day, while energy stocks fell sharply along with the price of crude oil. Crude for November delivery tumbled $1.50 to $38.72 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index plummeted by 3.2 percent, while the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index plunged by 2.7 percent and 2.5 percent, respectively.

Chemical stocks also came under pressure over the course of the session, dragging the S&P Chemical Sector Index down by 1.7 percent.

Other Markets

In overseas trading, the Tokyo Stock Exchange halted trading on Thursday due to a technical issue, while markets in China, Hong Kong, South Korea and Taiwan were closed for holidays. Australia's S&P/ASX 200 Index jumped by 1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index dipped by 0.2 percent, the U.K.'s FTSE 100 Index edged up by 0.2 percent and the French CAC 40 Index rose by 0.4 percent.

In the bond market, treasuries climbed back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 0.677 percent.

Looking Ahead

The monthly jobs report is likely to be in the spotlight on Friday, overshadowing separate reports on consumer sentiment and factory orders. Traders are also likely to keep an eye on the latest developments in Washington.

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