With traders going bargain hunting following recent weakness on Wall Street, stocks moved mostly higher during trading on Thursday. The markets also benefited from positive sentiment generated by upbeat trade data.
The major averages pulled back well off their highs going into the close but remained in positive territory. The Dow rose 75.42 points or 0.6 percent to 12,124.46, the Nasdaq climbed 9.49 points or 0.4 percent to 2,684.87 and the S&P 500 advanced 9.44 points or 0.7 percent to 1,289.00.
The strength on Wall Street came as traders looked to pick up stocks at reduced levels following the selling seen in recent sessions, which pulled the major averages down to two-month lows.
Additional buying interest was generated by a report from the Commerce Department showing that the U.S. trade deficit unexpectedly narrowed in April as the value of exports rose to a record high.
The report showed that the trade deficit narrowed to $43.7 billion in April from a revised $46.8 billion in March. Economists had expected the trade deficit to widen to $49.0 billion from the $48.2 billion originally reported for the previous month.
The unexpectedly narrower deficit came as the value of exports rose by 1.3 percent to a record high of $175.6 billion, while the value of imports fell 0.5 percent to $219.2 billion. The drop in the value of imports was largely due to reduced imports from Japan as a result of the recent earthquake.
Meanwhile, traders largely shrugged off a separate report from the Labor Department showing an unexpected increase in initial jobless claims in the week ended June 4th.
The Labor Department said jobless claims edged up to 427,000 from the previous week's revised figure of 426,000, while economists had expected claims to slip to 418,000 from the 422,000 originally reported for the previous week.
In corporate news, shares of Texas Instruments (TXN) turned higher over the course of the trading session even though the chip maker lowered its second quarter guidance. The company attributed the reduced guidance to weak demand from a single customer.
Texas Instruments closed up by 0.7 percent after hitting its worst intraday level in nearly three months earlier in the day.
Sector News
Health insurance stocks turned in some of the market's best performances, resulting in a 2.7 percent gain by the Morgan Stanley Healthcare Payor Index. Cigna (CI) helped to lead the sector higher, advancing by 4.5 percent to its best closing level in well over three years.
The strength among insurance stocks may have been due in part to reports that judges on the 11th U.S. Circuit Court of Appeals appeared sympathetic to claims that the health care reform law is unconstitutional. The court held a hearing on the law on Wednesday.
Considerable strength was also visible among oil service stocks, which moved higher along with the price of crude oil. With crude for July delivery climbing $1.19 to $101.93 a barrel, the Philadelphia Oil Service Index rose by 2 percent.
Similarly, gold stocks saw significant strength, with the NYSE Gold Bugs Index rising by 1.8 percent as gold for August delivery closed up $4 at $1,542.70 an ounce. Banking, railroad, and healthcare provider stocks also posted notable gains, moving to the upside along with most of the major sectors.
On the other hand, commercial real estate stocks came under pressure on the day, dragging the Morgan Stanley REIT Index down by 1.1 percent to its lowest closing level in well over a month.
Other Markets
In overseas trading, stocks markets in the Asia-Pacific region closed mostly lower on Thursday, although Japan's Nikkei 225 Index bucked the downtrend once again, edging up by 0.2 percent. Hong Kong's Hang Seng dipped by 0.2 percent, while China's Shanghai Composite Index plunged by 1.7 percent.
Meanwhile, the major European markets all moved to the upside on the day. The U.K.'s FTSE 100 Index rose by 0.8 percent, while the French CAC 40 Index and the German DAX Index advanced by 1.1 percent and 1.4 percent, respectively.
In the bond market, treasuries turned lower over the course of the trading day after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.6 basis points to 2.998 percent after hitting a six-month low of 2.919 percent.
Looking Ahead
While the economic calendar is once again relatively light on Friday, trading could be impacted by the release of a Labor Department report on import and exports prices.
On the earnings front, National Semiconductor (NSM) is scheduled to release its fourth quarter results after the close of trading.
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