RTTNews - Stocks finished largely on the upside Thursday after trading in a range for most of the session. While the tech-heavy Nasdaq closed nearly flat, the Dow and the S&P 500 posted notable gains as traders reacted to some encouraging economic data.

Some buying interest was generated by the release of a report from the Philadelphia Federal Reserve showing that the pace of contraction in the mid-Atlantic region's manufacturing slowed by much more than economists had been anticipating.

The Philly Fed said its index of activity in the manufacturing sector rose to a negative 2.2 in June from a negative 22.6 in May, although a negative reading still indicates a contraction. Economists had been expecting a much more modest increase to a reading of negative 17.0.

Separately, a report from the Conference Board showed that its leading indicators index rose 1.2 percent in May following an upwardly revised 1.1 percent increase in April. Economists had expected the index to increase by 1.0 percent, matching the increase originally reported for the previous month.

While employment data from the Labor Department showed an increase in weekly jobless claims, some optimism was generated by a drop in continuing claims, which fell by 148,000 in the week ended June 6th to 6.687 million. This marked the first drop in continuing claims since the week ended January 3rd.

Meanwhile, on Capitol Hill, both Republicans and Democrats on the Senate Banking Committee expressed skepticism about Treasury Secretary Timothy Geithner's proposal to set up the Federal Reserve as the primary regulator of risks to the entire financial system.

Geithner responded by pointing out that central banks around the world generally have the authority to set monetary policy and to deal with the stability of financial systems.

The Treasury Secretary's afternoon appearance before the House Financial Services Committee was postponed for another date amid a floor vote.

After closing lower in the three previous sessions, the Dow closed up 58.42 points or 0.7 percent at 8,555.60 and the S&P 500 closed up 7.66 points or 0.8 percent at 918.37. Meanwhile, the Nasdaq underperformed throughout the session and closed down 0.34 points or less than a tenth of a percent at 1,807.72.

Sector News

Most of the major sectors finished the day on the upside, helping to offset the losses seen earlier in the week.

Healthcare provider and health insurance stocks finished the day notably higher. The Morgan Stanley Healthcare Provider Index and the Morgan Stanley Healthcare Payor Index closed up by 3.9 percent and 6.8 percent, respectively.

One of the day's best performers in the health insurance sector was HealthNet (HNT), which closed up by 12.4 percent on the day. The stock continued its recovery from its lowest closing price in over three months, which was reached earlier this week.

The gains by healthcare-related stocks came as some of the more drastic healthcare reform proposals have failed to gain traction among lawmakers, reassuring some investors.

Banking stocks also showed considerable gains on the day, as reflected by the 3 percent gain posted by the Kbw Bank Index. The day's advance lifted the index well off the six-week closing low set in the previous session.

Biotechnology and tobacco stocks are also advanced by considerable margins, helping their respective indices to bounce off multi-week lows.

Meanwhile, semiconductor and gold stocks saw notable losses, with the Philadelphia Semiconductor Index and the NYSE Arca Gold Bugs Index slipping by 1.8 percent and 2.6 percent, respectively.

Weakness was also visible among housing and retail stocks. Notably, the Philadelphia Housing Sector Index fell 1.6 percent, ending the session at its lowest closing level in over two months.

Dow Components

Most of the Dow components posted gains on the day, helping the blue chip index to finish moderately higher.

Financial stalwarts Bank of America (BAC) and JP Morgan (JPM) led the way higher, climbing by 4.9 percent and 4.4 percent, respectively. With the gain, JP Morgan moved well off the six week closing low that it set on Wednesday.

While Kraft (KFT), Merck (MRK) and Coca-Cola (KO) also moved back to the upside after recent losses, General Electric (GE) and Caterpillar (CAT) turned in disappointing performances, falling to their worst closing levels in roughly six weeks.

Intel (INTC) and Home Depot (HD) also pulled back on the day, falling by 1.7 percent and 1.3 percent, respectively. With the day's decline the stocks gave back most of the gains posted in the previous session.

Other Markets

In overseas trading, stock markets across the Asia Pacific region ended Thursday's trading notably lower. Japan's benchmark Nikkei 225 Index closed down 0.8 percent, while Hong Kong's Hang Seng finished down 1.7 percent.

Meanwhile, the major European markets finished the day on the upside. The French CAC 40 Index and the German DAX Index closed up by 1 percent and 0.8 percent, respectively. The U.K.'s FTSE 100 Index inched higher, finishing just above the unchanged mark.

In the bond markets, treasuries saw a significant pullback. Subsequently, the yield on the benchmark ten-year note finished at 3.834 percent, a jump of 18.7 basis points on the day.

Looking Ahead

With a subdued session on tap for Friday amid a lack of significant economic data, earnings figures from CarMax (KMX) and Research In Motion (RIMM) may be in focus. In addition, traders may look to any other corporate news to guide trading.

For comments and feedback: contact editorial@rttnews.com