RTTNews - Following a disappointing start on the heels of disheartening employment data, stocks staged a substantial recovery and posted strong gains on Thursday. The major averages all finished the day firmly in positive territory, with the Dow snapping a four session losing streak.
The rebound came as traders did some bargain hunting in a number of embattled sectors that have trended lower for much of the past month.
Ahead of the opening bell, traders digested a report from the Labor Department showing that initial jobless claims for the week ended June 20th came in at 627,000, up from last week's revised figure of 612,000.
The increase in jobless claims surprised economists, who had expected the number to edge down to 600,000 from the 608,000 originally reported for the previous week. The data prompted a lower open, but selling pressure waned not long after the start of trading.
Separately, the Commerce Department revealed its final revision to the first quarter gross domestic product. The report indicated that first quarter GDP contracted by a revised 5.5 percent compared to the 5.7 percent decrease that had been reported.
Wall Street also watched Federal Reserve Chairman Ben Bernanke as he faced tough questions from lawmakers Thursday regarding his role in Bank of America Corp.'s (BAC) acquisition of Merrill Lynch.
Although Bernanke told members of the House Committee on Oversight and Government Reform that the Fed acted with the highest integrity in working with BofA on the acquisition, some members were less than convinced.
On the earnings front, Bed Bath & Beyond (BBBY) said its first-quarter net income rose to $0.34 per share from $0.30 per share in the same quarter last year, exceed analyst estimates for earnings of $0.25 per share.
While Nike (NKE) reported adjusted fourth quarter net income of $0.99 per share, which beat Wall Street expectations of $0.96 per share, the firm said worldwide future orders scheduled for delivery from June 2009 through November 2009 are down 12 percent from a year ago.
The major averages all closed up by comparable margins, climbing by 2.1 percent each. The Dow finished up by 172.54 points at 8,472.40, the Nasdaq rose 37.20 points to 1,829.54 and the S&P 500 jumped 19.32 points to 920.26.
Airline stocks posted some of the day's strongest gains, with the NYSE Arca Airline Index advancing by 6.5 percent. The upward move lifted the index further off its worst closing level in well over two months, reached earlier this week.
Specifically, shares of Gol Linhas (GOL) helped lead the sector move higher, posting an 8.9 percent gain on the day. The gain lifted shares of the Brazilian airline to their best closing price in nearly nine months.
Gold and housing stocks also saw significant strength, with the NYSE Arca Gold Bugs Index and Philadelphia Housing Sector Index moving up by 5 percent and 4.3 percent, respectively. The indices were able to extend their gains for a third straight session, regaining some ground after Monday's retreat.
The housing sector was boosted by shares of Lennar (LEN), which climbed by 17.5 percent on the session. Despite reporting a slightly wider second quarter loss, traders focused on the 63 percent surge in home orders for the firm. With the gain, the stock has nearly offset the steep losses experienced earlier this month.
Healthcare, oil service and steel stocks also enjoyed strong outings, reflecting the day's broad based rally.
All but one of the Dow components closed higher on the day, helping the blue chip index to finish with a triple digit gain. Bank of America (BAC) finished the day unchanged.
Pfizer (PFE) saw a notable upward move, climbing by 4.1 percent on the session. With the move, the stock pared its recent losses and finished the day at a six-week closing high.
Shares of American Express (AXP) also jumped by a considerable margin, posting a gain of 6.6 percent on the day. The advance helped the stock to recover from the two-month closing low set in the previous session.
Shares of Alcoa (AA), Merck (MRK), Home Depot (HD) and Caterpillar (CAT) also showed significant moves to the upside.
In overseas trading, stock markets across the Asia-Pacific region ended Thursday's session showing strong gains. Japan's benchmark Nikkei 225 Index closed up 2.2 percent, while Hong Kong's Hang Seng Index jumped 2.1 percent.
Meanwhile, the major European markets closed firmly on the downside, with the German DAX Index and the U.K.'s FTSE 100 Index both sliding by 1.4 percent, while the French CAC 40 Index fell by 0.7 percent.
In the bond markets, treasuries posted considerable gains, benefiting from a positive reaction to the results of a seven-year note auction. Subsequently, the benchmark ten-year note closed at 3.546 percent, a drop of 13.9 basis points on the day.
Looking ahead, traders are likely to focus on personal income and spending figures for May set to be released by the Commerce Department on Friday.
Economists expect income to increase by 0.3 percent in May following a 0.5 percent increase in April, while spending is expected to rise 0.3 percent after edging down 0.1 percent in the previous month. The report is set to be released at 8:30 a.m. ET.
Shortly after the opening bell on Wall Street, traders will be presented with the Reuters/University of Michigan's revision to June's consumer sentiment index.
Economists expect the index to show a reading of 69.0, unchanged from the first half of the month. The report is scheduled to be released at 9:55 a.m. ET.
Trading on Friday could also be impacted by the release of quarterly results from Palm (PALM) and Micron Technology (MU) after the close of trading today.
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