RTTNews - After seeing significant weakness in the previous session, stocks posted notable gains on Thursday as trader concerns regarding rising interest rates were cooled by a respectable bond auction. The major averages saw some volatility early on before moving firmly into positive territory in the early afternoon.
The major averages were bolstered by the results of the $26.0 billion seven-year note auction conducted by the Treasury Department earlier this afternoon. The sale drew a high-yield of 3.30 percent while seeing modestly strong demand, with the bid-to-cover ratio coming in at 2.26.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The demand for the long-term notes mitigated some trader concern regarding the rising interest rates in the headwind of the Federal Reserve's quantitative easing measures.
Earlier in the day, traders expressed some uncertainty about the economic after a Commerce Department report showed a slower than expected pace of new home sales in April.
The data showed that new homes sales edged up 0.3 percent to an annual rate of 352,000 in April from a downwardly revised 351,000 in March. Economists had expected sales to rise to 360,000 from the 356,000 originally reported for the previous month.
A separate report from the Labor Department showed that initial jobless claims in the week ended May 23rd came in at 623,000. This was down 13,000 from a revised mark of 636,000 in the previous week. Economists had expected claims to fall to 628,000 from the 631,000 originally reported for the previous week.
At the same time, continuing claims, which measure the number of people receiving ongoing unemployment help, rose once again and set another record high. The statistic climbed 110,000 to 6.788 million.
Meanwhile, a report from the Commerce Department showed that orders for durable goods increased by much more than expected in the month of April, although the stronger than expected growth came after a steep decline in March.
The report said that durable goods orders jumped 1.9 percent in April following a downwardly revised 2.1 percent decrease in March. Economists had expected orders to edge up 0.5 percent compared to the 0.8 percent drop that had been reported for the previous month.
In other news, General Motors (GM) bondholders have accepted an amended debt-for-equity offer that will help the auto giant restructure.
The firm also said that a recent U.S. Treasury proposal provides incentives for GM's unsecured bondholders to support GM's restructuring efforts in the event GM decides to pursue a 363 sale as part of its likely bankruptcy proceeding.
The company said that the implementation of this proposal would result in a New GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success.
Meanwhile, Time Warner Inc. (TWX) announced that its Board has authorized management to proceed with plans to spin off its AOL Internet business. Following the proposed transaction, AOL would be an independent, publicly traded company.
The major averages moved roughly sideways going into the close, hovering near their highs of the day. The Dow closed up 103.78 points or 1.3 percent at 8,403.80, the Nasdaq closed up 20.71 points or 1.2 percent at 1,751.79 and the S&P 500 closed up 13.77 points or 1.5 percent at 906.83.
Strength emerged in most major sectors over the course of the trading, as reflected by the notable upward move by the major average on the day.
Resource stocks turned in some of the day's best performances, benefiting from an increase in commodities prices. Specifically, oil service stocks posted particularly strong gains, driving the Philadelphia Oil Services Sector Index up 4.3 percent on the day.
Among oil service stocks, shares of Transocean (RIG) surged up 5.9 percent, ending the session at its their best closing price in well over six months.
Steel stocks also rose considerably, as reflected by the 4.2 percent gain posted by Amex Steel Index. With the surge, the index set a seven-month closing high.
A variety of other sectors also moved higher over the course of the trading day, with financial, real estate, and utilities stocks posting notable gains.
Meanwhile, housing and retail stocks moderated some of the day's gains, with the Philadelphia Housing Sector Index and the S&P Retail Index falling by 1.2 and 1.3 percent, respectively.
Most Dow components saw gains on the day, contributing to the noteworthy advance by the blue chip index.
The Dow was boosted by shares of AT&T (T), which rose by 2.3 percent on the session. With the advance, the stock continues to recover from the more than two-month low set late last week.
JP Morgan (JPM) also helped to lead the Dow higher, with the financial services giant jumping by 5.7 percent. Shares of Chevron (CVX), American Express (AXP), and Bank of America (BAC) also showed strong upward moves.
On the other hand, shares of Home Depot (HD) came under considerable pressure, with the home improvement retailer slipping by 2.7 percent on the session. With the retreat, the stock extended its recent losses, closing at its worst level in five weeks.
General Motors (GM) and Caterpillar (CAT) also posted notable losses, helping to mitigate some of the Dow's gain.
Stocks markets across the Asia-Pacific region turned in a mixed performance on Thursday, although the markets in Hong Kong and mainland China were closed. Japan's benchmark Nikkei 225 Index edged up 0.1 percent.
Meanwhile, the major European markets all closed firmly in negative territory. The French CAC 40 Index and the German DAX Index fell 1.0 and 1.4 percent, respectively, while the U.K.'s FTSE 100 Index also closed down 0.7 percent.
In the bond markets, treasuries closed modestly higher following a volatile session. Subsequently, the yield on the benchmark note finished at 3.67 percent, a loss of 2.3 basis points on the day.
Friday's trading is likely to be impacted by an influx of key economic data. Traders will look to preliminary gross domestic product data for the first quarter, with the contraction in GDP expected to be revised to 5.5 percent from the originally reported 6.1 percent drop.
Shortly after the opening bell, traders will be presented with business activity figures from the Chicago area as well as the Reuters/University of Michigan's revised reading on consumer sentiment for the month of May.
Trading may also be affected by reaction to quarterly results from Dell (DELL), Marvell Technology (MRVL), and Novell (NOVL), which all released their results after the close of trading today.
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