While stocks saw considerable early strength on Thursday, the markets moved lower over the course of the day as traders reacted to news that auto giant Chrysler has filed for Chapter 11 bankruptcy protection. The major averages eventually ended the day mixed.
President Barack Obama revealed that Chrysler would file for bankruptcy in remarks at the White House earlier in the day, adding that the company has reached an agreement to form a partnership with Italian automaker Fiat.
Obama said that he expects Chrysler's bankruptcy to be quick and minimally disruptive and said he believes the company will emerge from the process stronger and more competitive.
Although Chrysler was a pillar of the U.S. auto industry for decades, its inability to move fast enough to adapt to the changing market marked the beginning of its demise.
We simply cannot keep this company or any company afloat on an endless supply of tax dollars, Obama said.
He noted that the government would provide nearly $3.5 billion to keep the company somewhat functioning while the filing takes place and an additional $4.7 billion once Fiat takes over.
The strength seen in morning trading came as traders reacted positively to the latest batch of earnings and economic news, including a report from the Labor Department showing a notable decrease in initial jobless claims in the week ended April 25th.
The Labor Department said that initial jobless claims fell to 631,000 from the previous week's revised figure of 645,000. Economists had expected jobless claims to come in unchanged compared to the 640,000 originally reported for the previous week.
However, the report also showed a continued increase in continuing claims, which rose to another new record high of 6.271 million in the week ended April 18th. The continued increase suggests that people are having trouble finding jobs after they are laid off.
In earnings news, shares of Dow Chemical (DOW) moved sharply higher after the chemical giant reported first quarter earnings that showed a steep decline year-over-year but came in well above analyst estimates.
On the other hand, shares of Exxon Mobil (XOM) saw some weakness after the oil giant reported first quarter earnings that fell to $0.92 per share from $2.02 per share in the year-ago quarter and came in below analyst estimates of $0.95 per share.
The major averages finished the day mixed, with the Nasdaq posting a modest gain. While the Nasdaq closed up 5.36 points or 0.3 percent at 1,717.30, the Dow closed down 17.61 points or 0.2 percent at 8,168.12 and the S&P 500 closed down 0.83 points or 0.1 percent at 872.81.
Despite the mixed performance on the day, the major averages all closed higher for April, adding to the standout gains posted in March. The Dow rose 7.4 percent for the month, while the Nasdaq and the S&P 500 posted monthly gains of 12.3 percent and 9.4 percent, respectively.
Despite the uncertainty seen over the course of the trading day, steel stocks managed to hold onto strong gains, resulting in a 3.5 percent gain by the Amex Steel Index. Nonetheless, the index remained stuck in a recent trading range.
AK Steel (AKS) turned in one of the sector's best performances, with the steel producer closing up 7.1 percent. The gain extended a recent upward move by AK Steel, which ended the session at its best closing level in almost six months.
Technology stocks also saw continued strength, contributing to the higher close by the tech-heavy Nasdaq. Semiconductor, electronic storage, and internet stocks turned in some of the tech sector's best performances on the day.
While some strength also remained visible among retail stocks, gold stocks saw considerable weakness amid a notable decrease by the price of the precious metal. With gold for June delivery closing down $9.30 at $891.20 an ounce, the Amex Gold Bugs Index fell 2.8 percent.
Banking stocks also moved lower over the course of the trading day, dragging the Kbw Bank Index down 2.1 percent. Some biotechnology, tobacco, and energy stocks also ended the day firmly in negative territory.
While the Dow components turned in a mixed performance on the day, notable declines by some of the blue chip stocks contributed to the modest loss by the index.
JP Morgan (JPM) turned in one of the Dow's worst performances, with the financial services provider closing down 4.3 percent. The loss by JP Morgan came after it ended the previous session at its best closing level in well over four months.
Shares of Exxon Mobil also came under pressure on the day after reporting disappointing quarterly results, ending the session down 2.6 percent. Chevron (CVX) also ended the day firmly in the red on the news.
While notable losses by Citigroup (C), McDonald's (MCD), and Procter & Gamble (PG) also contributed to the lower close by Dow, strong gains by General Motors (GM), Caterpillar (CAT), and Disney (DIS) helped to limit the downside for the blue chip index.
In overseas trading, stock markets across the Asia-Pacific region showed strong upward moves on Thursday, with the strength seen on Wall Street overnight generating some buying interest. Japan's benchmark Nikkei 225 Index moved sharply higher, closing up 3.9 percent.
The major European markets also ended the day considerably higher, with the U.K.'s FTSE 100 Index closing up 1.3 percent on the day, while the French CAC 40 Index and the German DAX Index both advanced 1.4 percent.
In the bond market, treasuries closed mostly lower on the day, with the benchmark ten-year note lingering in negative territory throughout the session. Subsequently, the yield on the ten-year note closed up 2.8 basis points at 3.124 percent, a five-month closing high.
The manufacturing industry is likely to be in focus on Friday, with the Institute for Supply Management due to release its report on manufacturing activity in the month of April and the Commerce Department due to release its report on March factory orders.
On the earnings front, Chiquita (CQB), MetLife (MET), and QLogic (QLGC) are among the companies due to release their results after the close of trading today, while Chevron (CVX), Clorox (CLX), and MasterCard (MA) are among those due to report before the bell on Friday.
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