RTTNews - Stocks saw strong gains on Thursday, helped by some upbeat news from the manufacturing sector that helped to offset a disappointing jobs report. The major averages all finished in positive territory by solid margins, extending their gains for a third straight session.

Some buying interest was generated by the release of a report from the Philadelphia Federal Reserve saying that manufacturing activity in the mid-Atlantic region showed some signs of stabilization.

The Philly Fed said its index of current activity rose to 4.2 in August from a negative 7.5 in July, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase to a negative 2.0.

With the bigger than expected increase, the index rose above zero for the first time since September of 2008 and reached its highest level since November of 2007.

Separately, research group the Conference Board said that its leading economic indicators index increased for the fourth consecutive month in July, signifying a likely improvement in economic conditions in the near term. The index of leading economic indicators rose 0.6 percent in July following a 0.7 percent increase in June.

Earlier, the Labor Department released a report showing that first-time claims for unemployment benefits unexpectedly increased to 576,000 in the week ended August 15th from the previous week's revised figure of 561,000.

The increase came as a surprise to economists, who had expected jobless claims to edge down to 550,000 from the 558,000 originally reported for the previous week. Despite the recent concerns regarding the battered labor market, the disappointing data saw little reaction.

On the earnings front, traders also digested quarterly results from Sears Holdings (SHLD), NetApp (NTAP), PetSmart (PETM), Rio Tinto Group (RTP) and Heinz (HNZ), among others.

The major averages reached new highs for the session in the final hour of trading, but they gave back some ground going into the close. The Dow closed up by 70.89 points or 0.8 percent at 9,350.05, the Nasdaq climbed by 19.98 points or 1 percent to 1,989.22 and the S&P 500 rose by 10.91 points or 1.1 percent to 1,007.37.

Sector News

Banking stocks turned in some of the day's best performances, with the Kbw Bank Index posting a 2.9 percent gain on the day. With the gain, the index rose for the third straight session and set a fresh eight-month closing high.

Commercial real estate stocks also rose by notable margins, resulting in a 4.2 percent gain by the Morgan Stanley REIT Index. Despite the surge, the index remained stuck in a recent trading range.

Airline, telecommunications, networking, and brokerage stocks also saw considerable gains, reflecting strength in a variety of sectors on the day.

Nonetheless, most of today's gainers were unable to break out of recent trading ranges amid the choppy movement seen in stocks so far this month.

Dow Components

Shares of networking giant Cisco (CSCO) and airplane manufacturer Boeing (BA) led the Dow higher, climbing by 3.1 percent and 2.8 percent, respectively. Cisco extended its gains for a third straight session, bouncing further off of Monday's one-month closing low, while Boeing moved off of Wednesday's three-week low.

Financial stocks also boosted the Dow, with American Express (AXP) posting a 2.6 percent gain, while JP Morgan Chase (JPM) and Bank Of America (BAC) also rose by more than 2 percent each. Despite today's performance, the stocks remained stuck in three-week trading ranges.

While United Technologies (UTX), General Electric (GE) and Disney (DIS) also moved notably higher, Kraft Foods (KFT) limited the gain by the blue chip index, posting a 1 percent loss.

Shares of drug maker Pfizer (PFE) also slipped, falling by 0.9 percent. The move pulled the stock down from Wednesday's three and a half week closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region rebounded from yesterday's losses on Thursday. Japan's benchmark Nikkei 225 Index advanced by 1.8 percent, while Hong Kong's Hang Seng Index jumped 1.9 percent.

The major European markets also closed on the upside, with the German DAX Index and the French CAC 40 Index rising by 1.5 percent and 1.6 percent, respectively, while the U.K.'s FTSE 100 Index rose by 1.4 percent.

In the bond markets, the benchmark ten-year note recovered from its early losses after the day's auction announcements and saw a steady upward move for the remainder of the session. Subsequently, the yield on the note, which moves opposite of its price, closed down 2.8 basis points at 3.435 percent.

Looking Ahead

On Friday, traders will look to existing home sales data and a speech from Federal Reserve Chairman Ben Bernanke on the Year of Crisis at the Kansas City Fed's annual Jackson Hole conference amid an otherwise light day on the economic front. Traders will also have a chance to react to quarterly results from Gap (GPS), Salesforce.com (CRM) and J.M. Smucker (SJM).

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