Stocks are continuing to show notable strength during early afternoon trading on Thursday, as investors react positively to comments from Treasury Secretary Tim Geithner and some mixed economic news. The strength in the markets is helping stocks add to their recent gains.
Traders are focused on Capitol Hill, where Treasury Secretary Tim Geithner is arguing that there need to be changes in how the government oversees risk-taking in financial markets. He is pushing for tougher rules on how big companies manage their finances as well as for tighter controls on some hedge funds and money-market mutual funds.
Testifying before the House Financial Services Committee, Geithner outlined a broad plan to shore up the patchwork financial regulatory system, asking for the creation of a systemic risk regulator in order to oversee large financial institutions, like AIG.
In other news, Federal Reserve Bank of Atlanta President Dennis Lockhart said earlier that economic turmoil and the resulting global recession have generated a need for strong action from U.S. fiscal policymakers.
Many actions have been taken to stabilize the U.S. financial system, and further very important measures are in train, Lockhart said. For instance, the removal of legacy toxic assets from bank balance sheets is an essential step.
On the economic front, the Labor Department released its jobless claims report for the week ended March 21st, showing that initial claims rose to 652,000 from the previous week's revised figure of 644,000. Economists had expected jobless claims to rise to 650,000 from the 646,000 originally reported for the previous week.
The report also showed that continuing claims in the week ended March 14th rose to another new record high of 5.560 million from the preceding week's revised level of 5.438 million.
At the same time, the Commerce Department's final report on fourth quarter GDP showed that the economy contracted a little faster than previously estimated, although the revised drop in GDP was not quite as steep as economists had been expecting.
Meanwhile, in corporate news, Best Buy (BBY) released fourth quarter earnings that fell year-over-year but came in considerably above expectations on an adjusted basis. With the strong quarterly report, shares of the electronic retailer are currently up 14.3 percent.
The major averages have seen some further upside in recent trading, rising to new highs for the session. The Dow is currently up 106.17 at 7,855.98, the Nasdaq is up 40.36 at 1,569.31 and the S&P 500 is up 11.86 at 825.74.
While transportation stocks continue to lead the advance, retail stocks are also posting strong gains on the day, with the S&P Retail Index currently up 5.1 percent. With the advance, the index has risen to its highest level in nearly three months.
Along with the strong gain by Best Buy, the strength in the retail sector also comes amid notable upward moves by Office Max (OMX), AnnTaylor (ANN), and Abercrombie & Fitch (ANF).
Housing stocks are also posting notable gains on the day, with the Philadelphia Housing Index up 4.3 percent. The gain extends a recent upward move by the index, which is currently poised to end the session at its best closing level since early February.
Semiconductor, steel, and networking are also posting substantial gains. The Philadelphia Semiconductor Index is up 4.5 percent, while the Amex Steel Index and the Amex Networking Index are up 4.4 percent and 4.2 percent, respectively.
While most of the other major sectors are also moving higher, banking and tobacco stocks are turning in some of the worst performances of the day. The Dow Jones Bank Index is down 1.5 percent and the Amex Tobacco Index is down 1.1 percent.
Stocks In The News
Among individual stocks, Red Hat (RHT) is posting a gain of 16.9 percent on the day following the release of strong fourth-quarter results. With the advance, the stock has risen to its highest level in six months.
The maker of Linux posted adjusted fourth quarter earnings of $0.22 per share, compared to $0.21 per share in the same period last year. On average, analysts expected the company to report earnings of $0.20 per share.
Additionally, Dr Pepper Snapple Group (DPS) is up 11.4 percent after the soft-drink maker announced fourth quarter adjusted results that came in better than analysts had anticipated. The company also provided full-year guidance that came in line with expectations.
Meanwhile, Fred's, Inc. (FRED) is moving lower on the day following news that the company's fourth-quarter results failed to meet expectations, disappointing investors.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Thursday. Japan's benchmark Nikkei 225 Index ended the trading session up 1.8 percent, more than offsetting the modest loss that it posted in the previous session.
Meanwhile, the major European markets are continuing to see uncertainty, with the German DAX Index and the U.K.'s FTSE 100 both up 0.5 percent, while the French CAC 40 Index is suffering a loss of 0.2 percent.
In the bond market, treasuries have moved back to the upside over the course of the session after seeing some initial weakness. Subsequently, the yield on the benchmark 10-year note has slipped below the unchanged line and is currently down 1.3 basis points at 2.759 percent.
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