RTTNews - Stocks are continuing to post strong gains in mid-afternoon trading on Thursday, buoyed by the results of the day's seven-year note auction. The major averages are extending their stay in positive territory and are on pace to finish at their highest levels of the year.
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.
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.
Traders also looked to a slew of earnings reports with Visa Inc. (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.
The major averages have remained more or less rangebound in recent trading, holding onto substantial gains. The Dow is currently up 153.72 at 9,224.44, the Nasdaq is up 27.93 at 1,995.69 and the S&P 500 is up 18.08 at 993.23.
A majority of the Dow components are seeing considerable strength, helping the blue chip index to post a triple digit gain.
Leading the Dow higher are shares of General Electric (GE), which have surged by 8.4 percent. The gain has lifted the stock to its best intraday level in roughly six weeks.
Chemical giant DuPont (DD) is also posting a strong gain, rising by 4.9 percent on the day. With the gain, the stock has reached its best intraday price in over eight months.
Further, Alcoa (AA) and Caterpillar (CAT) are rising by comparable margins, advancing by 4.9 percent and 4.6 percent, respectively. Alcoa has reached its best level in nearly six weeks, while Caterpillar is at its best intraday level in well over six months.
While Bank of America (BAC), United Technologies (UTX) and American Express (AXP) are also moving to the upside by notable margins, shares of Travelers (TRV) are down 1.6 percent. The pullback comes after the firm barely missed earnings and revenue estimates.
Resource stocks are holding onto notable gains in mid-afternoon trading, with steel stocks continuing to lead the sector higher. The upward move comes as commodity prices are rebounding on the NYMEX after some considerable losses.
Commercial real estate and chemical stocks are also turning in strong performances, with the S&P Chemical Index and the Morgan Stanley Real Estate Index rising by 3.7 percent and 4.3 percent, respectively. At its highs for the session, the real estate index was at its best level in over six months, while the chemical index climbed to its best intraday level in well over nine months.
Banking stocks are also on the rise, as reflected by the 3.7 percent gain being shown by the Kbw Bank Index. The jump has lifted the index to its best intraday level in well over two months.
Defense, electronic storage, telecommunications and transportation stocks are also showing strong moves to the upside, reflecting the broad based strength in the markets. Meanwhile, modest weakness remains visible among biotechnology stocks.
In Focus: Employment Data, Earnings News
As mentioned above, the Labor Department 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.
After the markets closed Wednesday, credit card giant Visa said its third quarter profit soared compared to last year, helped by lower expenses and a one-time gain from the sale of its stake in VisaNet do Brasil.
Visa's adjusted earnings came in above analysts' expectations along with its quarterly revenues. The company also reaffirmed its long-term guidance for 2010.
Meanwhile, Exxon Mobil reported adjusted second quarter earnings of $0.84 per share compared to $2.27 per share in the same quarter a year ago. The results came in well below analyst estimates of $1.01 per share. Quarterly revenues plummeted to $74.5 billion compared to $138 billion in the year-ago quarter but exceeded expectations of $71.3 billion.
Insurance stalwart Travelers reported second quarter net income of $1.27 per share, compared to $1.54 per share in the year ago quarter. Revenues for the quarter were $6.16 billion, down from $6.3 billion in the year ago quarter.
Wall Street analysts expected Travelers to report earnings of $1.28 per share on revenues of $6.17 billion. Although the firm raised its full year guidance, its still fell well short of estimates.
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 have largely turned positive following the release of the results of the seven-year note auction. Subsequently, the yield on the benchmark ten-year note is trading at 3.635 percent, posting a loss of 2.9 basis points on the day.
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