RTTNews - Positive news from the Philly Fed has helped to bolster trader sentiment on Thursday, helping traders to shrug off a disheartening jobs report. Stocks have seen a steady climb and are posting notable gains in mid-afternoon trading, looking to close higher for a third straight session.
The day's optimism was largely generated by a report from the Philly Fed showing that manufacturing activity in the mid-Atlantic region showed some signs of stabilization. The index of activity for August came in positive, which surprised economists who forecast only a modest improvement.
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.
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 are holding onto notable gains in mid-afternoon trading, stuck in a narrow range. The Dow is currently up 44.81 at 9,323.97, the Nasdaq is up 14.83 at 1,984.07 and the S&P 500 is up 8.34 at 1,004.80.
A majority of the Dow components are moving higher, contributing to the moderate gain being shown by the blue chip index in mid-afternoon trading.
Financial stocks are seeing some of the best performances in the Dow, with JP Morgan Chase (JPM) posting a 2.1 percent gain, while Bank Of America (BAC) and America Express (AXP) are also up by more than 2 percent. Despite the gains, the stocks remain stuck in three-week trading ranges.
Shares of networking giant Cisco (CSCO) are also on the rise, climbing by 2.2 percent. With the advance, the stock is extending its gains for a third straight session, bouncing further off of Monday's one-month closing low.
While General Electric (GE), Boeing (BA), Disney (DIS) are also moving notably higher, Kraft Foods (KFT) is limiting the gain by the blue chip index, posting a loss of 1.3 percent.
Shares of drug maker Merck (MRK) are also retreating, falling by 1.1 percent. The move is dragging the stock down off Wednesday's ten and half month closing high.
Commercial real estate and banking stocks are continuing their notable upward moves in mid-afternoon dealing, with the Morgan Stanley REIT Index and the Kbw Banking Index advancing by 3.6 percent and 2.3 percent, respectively. Despite the gains, the indices remain stuck in recent ranges.
Strength has also emerged among health insurance stocks, as reflected by the 1.1 percent gain being shown by the Morgan Stanley Healthcare Payor Index. Shares of Cigna (CI) are leading the way higher, posting a gain of 2.6 percent. With the jump, the stock is poised to finish the session at a ten-month closing high.
Telecommunications, railroad, brokerage, airline and internet stocks are also posting strong gains, reflecting the strength in a variety of equity segments on the day.
Nonetheless, most of today's gainers remain stuck in recent trading ranges amid the choppy movement seen in stocks so far this month.
On the other hand, trucking and computer hardware stocks are continuing to buck the day's uptrend, although they are posting only slim losses on the day.
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.
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 3.452 percent, posting at loss of 1.1 basis points.
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