RTTNews - Stocks have added to their early gains in afternoon trading on Thursday as traders react to a notable auction of thirty-year bonds. The major averages are all firmly in positive territory, holding onto considerable gains on the day.
This afternoon, traders digested the results of the Treasury Department's auction of $11.0 billion worth of thirty-year bonds. The sale drew a high-yield of 4.72 percent, its highest level since August of 2007 but below estimates of 4.80 percent.
The auction also attracted strong demand, with the bid-to-cover ratio coming in at 2.68. The sale of government-backed debt enjoyed strong interest from foreign financial entities seeking to bolster their positions in guaranteed returns.
The early strength in the markets came following a report from the Commerce Department that showed a notable increase in retail sales in the month of May. In a separate report, the Labor Department revealed its first time jobless claims data for the week ended June 6th, showering a bigger than expected decrease in claims.
The major averages are currently posting strong gains, although they are off their best levels of the day. The Dow is currently up 93.72 at 8,832.74, the Nasdaq is up 21.41 at 1,874.49 and the S&P 500 is up 13.16 at 952.31.
A vast majority of the Dow components are trading in positive territory, contributing to the strong gain being shown by the blue chip index in mid-afternoon trading.
Leading the way higher are shares of Bank of America (BAC), which are up by 8.6 percent, rising to a one-month high. The stock has been driven higher following an upgrade by Keefe, Bruyette & Woods, which raised its rating on the stock to Outperform from Market Perform.
Alcoa (AA) is also seeing considerable strength, posting a 6.4 percent gain in mid-afternoon trading. The day's climb propelled shares of Alcoa to their best intraday price in over five months earlier in the session.
Additionally, shares of Pfizer (PFE) and Merck (MRK) are up by 4.4 percent and 2.9 percent, respectively. With the move, the stocks are bouncing off of the multi-week lows set in the previous session.
Shares of Chevron (CVX), Microsoft (MSFT) and AT&T (T) are also showing considerable strength on the day.
Despite the day's broad-based gains, shares of American Express (AXP) and Boeing (BA) are retreating by 4.4 percent and 2.8 percent, respectively. With the retreat, the stocks pulling back well off the high set earlier this week.
Most of the major sectors are seeing continued strength in mid-afternoon trading, helping the major averages to hold onto considerable gains on the session.
Significant strength remains visible among resource stocks, with natural gas, steel, and oil service stocks turning in particularly strong performances. Notably, the Amex Natural Gas Index has risen by 4.3 percent on the day, reaching its best intraday level since early October.
Further, the Philadelphia Oil Service Index and the Amex Steel Index are up by 3.5 percent and 3.9 percent, respectively, also reaching their best intraday levels since early October. The sectors have been buoyed by an increase in commodity prices.
In addition, banking, biotechnology, computer hardware, and utility stocks are also showing considerable gains, reflecting the broad strength in equities on the day.
Meanwhile, housing and real estate stocks continue to buck the uptrend, with the Philadelphia Housing Sector Index and the Morgan Stanley Real Estate Index falling by 1.4 percent and 1.3 percent, respectively. Some retail and semiconductor stocks are also retreating on the day.
In Focus: Retail Sales, Employment Data, BofA's Lewis
Before the start of trading, a Commerce Department report showed that retail sales rose 0.5 percent in May following a revised 0.2 percent decrease in April. Economists had expected sales to increase by 0.5 percent compared to the 0.4 percent decrease originally reported for the previous month.
A considerable increase in sales by gas stations contributed to the retail sales growth, with gas station sales jumping 3.6 percent in May after slipping 0.8 percent in April. Excluding the increase in sales by gas station, retail sales showed a much more modest increase of 0.2 percent.
Separately, the U.S. Labor Department revealed that initial jobless claims, a closely watched gauge of layoffs, came in at 601,000 for the week ended at June 6th. This was down 24,000 from the previous week's revised level of 625,000.
However, continuing claims, which measure the number of people receiving ongoing unemployment help, rose to 6.816 million in the week ended May 30th. Due to an upward revision to the previous week's figure, continuing claims rose to a new record high for the 19th consecutive week.
In other news, the House Oversight and Government Reform Committee is hosting former Bank of America CEO Ken Lewis as part of a growing investigation into whether government officials pressured the bank to withhold details about the purchase of Merrill Lynch from investors despite ballooning losses at the brokerage firm.
Lewis told the Committee that while the alleged threats from federal officials to take drastic action if Bank of America backed out of the deal influenced his decision, they were not the deciding factor.
Treasury and Federal Reserve officials asked us to delay such an action, and expressed significant concerns about the systemic consequences and risk to Bank of America of pursuing such a course, Lewis stated.
In overseas trading, stock markets across the Asia-Pacific region ended Thursday's session largely unchanged. Japan's benchmark Nikkei 225 Index fell by 0.1 percent, while Hong Kong's Hang Seng closed up by less than a tenth of a percent.
Meanwhile, the major European markets all closed higher following early uncertainty. The U.K.'s FTSE 100 and the French CAC 40 Index both rose 0.6 percent, while German DAX Index closed up 1.1 percent.
In the bond markets, treasuries have surged following the auction of the thirty-year bond. Subsequently, the yield on the benchmark ten-year note is trading at 3.866 percent, a drop of 7.0 basis points on the day.
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