RTTNews - Stocks are holding onto strong gains in early afternoon trading on Thursday after receiving a boost from surprisingly positive manufacturing data from the Philadelphia Federal Reserve shortly after the opening bell. The major averages remain positive, looking to extend their gains for a third straight session.

Manufacturing activity in the mid-Atlantic region showed some signs of stabilizing, according to data released by the Philly Fed, with the index of activity in the sector unexpectedly climbing into positive territory in August.

In a separate report, 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.

Earlier, the Labor Department released a report showing that first-time claims for unemployment benefits unexpectedly increased in the week ended August 15th, although traders largely shrugged off the data despite recent concerns regarding the battered labor market.

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

The major averages have been more or less rangebound in recent trading, hovering firmly in positive territory. The Dow is currently up 36.27 at 9,315.43, the Nasdaq is up 12.10 at 1,981.34 and the S&P 500 is up 7.50 at 1,003.96.

Sector News

Banking stocks are turning in some of the day's best performances, with the Kbw Banking Index posting a 2.6 percent gain in early afternoon trading. With the gain, the index is adding to the more modest gains posted in the two previous sessions, although it remains off the seven-month high set earlier this month.

Among banking stocks, shares of SunTrust Banks (STI) have shown a strong upward move, advancing 5.2 percent. At its high for the session, SunTrust was at a seven-month intraday high.

Commercial real estate, railroad, airline, health insurance, and brokerage stocks have also shown notable moves to the upside, reflecting the day's broad based strength.

Despite the strong upward moves, most of today's gainers remain rangebound amid the choppy trading that has been seen over the course of August.

Meanwhile, trucking and computer hardware stocks are bucking the day's uptrend, although they are posting only slim losses on the day.

Stocks In The News

Gymboree Corp. (GYMB) is on the rise in early afternoon trading after the company reported second quarter earnings of $0.41 per share, beating analyst estimates of $0.39 per share. The stock has surged up by 12.1 percent, climbing to its best intraday level in over a year.

JDS Uniphase Corp. (JDSU) is also advancing after reporting a fourth quarter loss that was narrower than expected. The firm posted a loss of $0.01 per share, edging out estimates of a loss of $0.02 per share. Shares of the communications equipment maker are up by 7.3 percent, reaching a two-month intraday high.

On the other hand, pet supplies retailer PetSmart is plunging after the company lowered its full year earnings outlook to a range of $1.37 to $1.45 per share from its prior guidance of $1.42 to $1.52 per share. Analysts currently expect the company to earn $1.52 per share for the year. The stock has plummeted by 11.4 percent, falling to a five-month intraday low.

In Focus: Economic Data, Earnings News

As mentioned above, 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.

In a separate report, the Conference Board said its index of leading economic indicators rose 0.6 percent in July following a 0.7 percent increase in June. This marked the fourth consecutive month of growth for the index.

On the employment front, a report from the Labor Department showed that initial jobless claims rose to 576,000 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.

In earnings news, diversified retailer Sears Holdings reported a net loss of $0.17 per share for the second quarter, hurt by an 8.6 percent drop in comparable same store sales. Analysts expected the company report a profit of $0.35 per share for the quarter.

Data storage equipment maker NetApp said its first quarter profit increased from last year, helped by proceeds from the termination of the Data Domain deal.

Further, Rio Tinto Group, the world's third largest mining company, reported a 65 percent drop in net income for the first half of 2009, citing a drop in aluminum, iron ore and copper prices.

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, treasuries are seeing modest strength amid a choppy trading session. Subsequently, the yield on the benchmark ten-year note is trading at 3.455 percent, posting at loss of less than a basis point.

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