RTTNews - After a modest upward move at the opening bell on Thursday, stocks staged a substantial rally following an encouraging report on existing home sales. The major averages all closed in positive territory by substantial margins, with the Nasdaq able to extend its winning streak for the twelfth straight session.

Earlier, buying interest was generated by data from the National Association of Realtors that showed that existing home sales increased for the third consecutive month in June.

Existing home sales rose by 3.6 percent to an annual rate of 4.89 million units in June from a downwardly revised rate of 4.72 million in May. Economists had expected sales to rise to a 4.84 million unit rate from the 4.77 million unit rate originally reported for the previous month.

Although a separate report from the Labor Department showed that jobless claims rose in June, the figure rose by slightly less than economists had expected.

First-time claims in the week ended July 18th rose to 554,000 from the previous week's revised figure of 524,000. Economists had expected jobless claims to increase to 557,000 from the 522,000 originally reported for the previous week.

Traders also delved into a series of earnings reports, with 3M (MMM), Ford (F) and Wyeth (WYE) reporting results that surpassed Wall Street estimates. McDonald's (MCD), AT&T (T), Qualcomm (QCOM) also beat forecasts, although by more modest margins.

The major averages gave back some ground going into the close, although they held onto standout gains. The Dow closed up by 188.03 points or 2.1 percent at 9,069.29, the Nasdaq advanced by 47.22 points or 2.5 percent to 1.973.60 and the S&P 500 rose by 22.22 points or 2.3 percent to 976.29.

Sector News

Housing and biotechnology saw some of the day's strongest performances along with commercial real estate stocks. Housing stocks were boosted by the day's home sales data, while the strength in the biotech sector came on earnings from Affymetrix (AFFX) and Celgene (CELG).

The strength among real estate stocks was reflected by the 4 percent gain posted by the Morgan Stanley Real Estate Index. The day's advance lifted the index to its best closing level in six weeks.

Developers Diversified Realty (DDR) and LaSalle Hotel Properties (LHO) helped to lead the real estate sector higher, advancing by 12.9 percent and 10.3 percent, respectively.

Oil service and airline stocks also posted notable gains, with the Philadelphia Oil Service Index closing up 3.9 percent and the NYSE Arca Airline Index advancing 3.7 percent. Notably, the oil service index rose to its best level in six weeks, bolstered by an increase in the price of oil.

Transportation, brokerage, networking and banking stocks also rose by notable margins, reflecting the day's broad based strength in the equity markets.

Dow Components

Nearly all of the Dow components ended the day in positive territory, contributing to the substantial gain posted by the blue chip index.

3M was the Dow's best performer, with the diversified conglomerate surging up by 7.4 percent on the day. With the gain, shares of 3M closed at their best price in almost ten months. The advance by 3M came after the company reported second quarter earnings and sales that beat estimates.

Shares of entertainment giant Disney (DIS) also moved sharply higher, climbing by 5.6 percent on the day. The upward move lifted the stock to its best closing level in over nine months.

Shares of Caterpillar (CAT) and DuPont (DD) also showed strong upward moves, rising by 6.7 percent and 5.9 percent, respectively. Caterpillar closed at its best level in over six months, while DuPont finished at its highest price in over eight months.

While Alcoa (AA), Verizon (VZ), Bank of America (BAC) and JP Morgan Chase (JPM) also moved considerably higher, shares of McDonald's saw notable weakness.

McDonald's closed down by 4.6 percent, finishing at their worst price in two months. The retreat came after the fast food giant reported disappointing June same store sales. Wal-Mart (WMT) and Boeing (BA) were the other laggards in the Dow, although they fell by much more modest margins.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished on the upside on Thursday. While Japan's benchmark Nikkei 225 Index posted a 0.7 percent gain, Hong Kong's Hang Seng Index surged up by 3 percent.

The major European markets also closed notably higher, with the German DAX Index and the French CAC 40 Index finishing up by 2.5 and 2.1 percent, respectively, while the U.K.'s FTSE 100 Index posted a 1.5 percent gain.

In the bond markets, treasuries saw a selling spree amid the rally on Wall Street and emerging concerns over next week's influx of supply. Subsequently, the yield on the benchmark ten-year note closed at 3.709 percent, posting a gain of 15.5 basis points on the day.

Looking Ahead

On Friday, traders will have a chance to react to the latest earnings, with American Express (AXP), Microsoft (MSFT) and Amazon (AMZN) reporting after the bell today, and the likes of Black & Decker (BDK) and Schlumberger (SLB) reporting tomorrow morning.

The spotlight will also be on the latest reading on consumer sentiment from Reuters and the University of Michigan. Economists expect the figure to come in unchanged for the second half of July after slipping by more than 6 points to 64.6 earlier in the month. The data is scheduled to be released at 9:55 a.m. ET.

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