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Strong Economic Data Leads To Rally On Wall Street

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Stocks moved sharply higher during trading on Thursday, more than offsetting the pullback seen in the previous session. The Dow and the S&P 500 reached new record closing highs, while the Nasdaq ended the day at its best closing level in two months.

The major averages reached new highs in late-day trading before giving back some ground going into the close. The Dow jumped 305.10 points or 0.9 percent to 34,035.99, the Nasdaq soared 180.92 points or 1.3 percent to 14,038.76 and the S&P 500 surged up 45.76 points or 1.1 percent to 4,170.42.

The rally on Wall Street came following the release of a batch of largely upbeat U.S. economic data, including a Commerce Department report showing retail sales spiked by much more than expected in the month of March.

The Commerce Department said retail sales skyrocketed by 9.8 percent in March after tumbling by a revised 2.7 percent in February.

Economists had expected retail sales to surge up by 5.9 percent compared to the 3.0 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales soared by 8.4 percent in March after plunging by a revised 2.5 percent in February. Ex-auto sales were expected to jump by 5.0 percent.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by much more than anticipated in the week ended April 10th.

The Labor Department said initial jobless claims tumbled to 576,000, a decrease of 193,000 from the previous week's revised level of 769,000.

Economists had expected jobless claims to decline to 700,000 from the 744,000 originally reported for the previous week.

With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

The National Association of Home Builders also released a report showing a modest increase in U.S. homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index inched up to 83 in April after dipping to 82 in March, matching economist estimates.

The NAHB noted the uptick in homebuilder confidence came even as builders continued to grapple with rising lumber prices and supply chain issues and consumers faced higher home prices due to a lack inventory.

Meanwhile, the Federal Reserve released a report showing a rebound by industrial production in the month of March, although the increase fell short of expectations.

The Fed said industrial production jumped by 1.4 percent in March after plunging by a downwardly revised 2.6 percent in February.

However, economists had expected production to spike by 2.8 percent compared to the 2.2 percent slump originally reported for the previous month.

The Dow benefited from a significant advance by shares of UnitedHealth, with the managed care company jumping by 3.8 percent after reporting first quarter results that beat analyst estimates on both the top and bottom lines.

On the other hand, shares of Bank of America (BAC) came under pressure even though the financial giant reported better than expected first quarter results.

Sector News

Gold stocks turned in some of the market's best performances on the day, driving the NYSE Arca Gold Bugs Index up by 4.3 percent to its best closing level in over two months.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for June delivery soaring $30.50 to $1,766.80 an ounce.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.8 percent gain posted by the Philadelphia Semiconductor Index.

Advanced Micro Devices (AMD) and Nvidia (NVDA) posted standout gains on the day following positive comments from Raymond James.

Commercial real estate stocks also saw considerable strength on the day, with the Dow Jones U.S. Real Estate Index climbing by 1.8 percent to its best closing level in over a year.

Software, computer hardware, and biotechnology stocks also showed notable moves to the upside, while oil service stocks gave back ground after spiking on Wednesday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index inched up by 0.7 percent, while China's Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.6 percent, the French CAC 40 Index and the German DAX Index rose by 0.4 percent and 0.3 percent, respectively.

In the bond market, treasuries moved sharply higher despite the strong U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 10.8 basis points to 1.530 percent, its lowest closing level in over a month.

Looking Ahead

Following today's avalanche of data, the economic calendar is relatively quiet on Friday, but traders are still likely to keep an eye on reports on housing starts and consumer sentiment.

On the earnings front, Morgan Stanley (MS) is among the companies scheduled to release their quarterly results before the start of trading on Friday.

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