RTTNews - Stocks posted strong gains on Thursday, fueled by stabilizing earnings and employment figures, while respectable results for a seven-year note auction also boosted equities. The major averages all finished the day firmly in positive territory despite some late session profit taking, closing at their best levels of the year.
Early buying interest was generated as traders reacted positively to the latest earnings and economic data, including the Labor Department's report on first-time claims for unemployment benefits in the week ended July 25th.
While the Labor Department said jobless claims came in above the average analyst estimate, there were some concerns that claims could have come in substantially higher. Further, the four-week moving average fell for the fifth straight week, dropping to its lowest level since January.
The report said that weekly jobless claims rose to 584,000 from the previous week's revised figure of 559,000. Economists had expected jobless claims to rise to 575,000 from the 554,000 originally reported for the previous week. The report also showed that the less volatile four-week moving average fell to 559,000 from the previous week's revised average of 567,250.
Traders also delved into a slew of earnings reports, with Visa (V) reporting adjusted earnings and revenues that beat estimates. Cigna (CI), Tyco (TYC), Kellogg (K) and Master Card (MA) also surpassed expectations on the bottom line, although revenues largely missed the mark.
Meanwhile, energy giant Exxon Mobil (XOM) fell well short of earnings forecasts, although its revenues beat expectations.
Equities saw some modest upside after the results of the Treasury Department's $28.0 billion sale of seven-year notes showed that the auction attracted stronger than expected demand. The sale drew a high-yield of 3.369 percent, while the bid-to-cover ratio came in at 2.63.
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 major averages ceded considerable ground heading into the close, but they were able to hold onto strong gains. The Dow finished up by 83.74 points or 0.9 percent at 9,154.46, the Nasdaq advanced by 16.54 points or 0.8 percent to 1,984.30 and the S&P 500 rose by 11.60 points or 1.2 percent to 986.75.
Banking stocks saw notable strength on the day, as reflected by the 3.4 percent gain posted by the Kbw Bank Index. The jump lifted the index to its best closing level in well over two months.
The index was boosted by shares of Marshall Ilsley (MI), which surged up by 10.3 percent, closing at their highest price in roughly six weeks.
Resource stocks also posted strong gain on the day, with steel stocks leading the sector higher. The upward move came as commodity prices were able to rebound after seeing some considerable losses earlier in the week.
Commercial real estate and chemical stocks are also turned in particularly strong performances, with the Morgan Stanley Real Estate Index and the S&P Chemical Index finishing up by 3.7 percent and 3.2 percent, respectively. The real estate index closed at a six month high, while the chemical index rose to its best finish in nine months.
Defense, telecommunications, electronic storage and brokerage stocks are also showed strong moves to the upside, reflecting the broad based strength in the markets. Meanwhile, some biotechnology stocks bucked the uptrend, posting modest losses.
General Electric (GE) helped to lead the Dow higher, with the diversified conglomerate surging up by 7 percent on the day. The gain propelled the stock to its best closing price in roughly six weeks.
Chemical giant DuPont (DD) and aluminum producer Alcoa (AA) rose by comparable margins, posting gains of 4.3 percent and 4.1 percent, respectively. DuPont reached its best closing price in nearly nine months, while Alcoa advanced to a six week closing high.
The Dow was also pushed higher by shares of Caterpillar (CAT), which rose by 3.8 percent and Bank of America (BAC), which climbed by 3.3 percent. Caterpillar had its best finish in nearly seven months, while Bank of America finished the day at is highest closing price in nearly two months.
While United Technologies (UTX), JP Morgan Chase (JPM) and Home Depot (HD) also gained by substantial margins, shares of Travelers (TRV) fell by 1.6 percent. The pullback came after the firm barely missed earnings and revenue estimates.
Weakness was also visible in shares of McDonald's (MCD) and Exxon Mobil (XOM), which fell by 1.5 percent and 1 percent, respectively.
In overseas trading, stock markets across the Asia-Pacific region finished largely on the upside on Thursday. Hong Kong's Hang Seng Index and Japan's benchmark Nikkei 225 Index both rose by 0.5 percent.
The major European markets also closed notably higher, with the French CAC 40 Index and the German DAX Index finishing up by 1.7 percent and 2.1 percent, respectively, while the U.K.'s FTSE 100 Index rose by 1.9 percent.
In the bond markets, treasuries closed largely on the upside following the release of the results of the seven-year note auction. Subsequently, the yield on the benchmark ten-year note finished at 3.641 percent, posting a loss of 2.3 basis points on the day.
To close out a busy week on the earnings front, traders will have a chance to react to earnings from Disney (DIS), and Monster (MWW), which reported after the closing bell today, while Chevron (CVX) earnings, among others, are on tap for tomorrow.
The focus of the broader markets will also be on the Commerce Department's advanced reading on gross domestic product in the second quarter. Economists expect second quarter GDP to decline 1.5 percent after showing a 5.5 percent drop in the first quarter. The data is set to be released at 8:30 a.m. ET.
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