RTTNews - Stocks have shown a substantial turnaround over the course of the trading day on Thursday, showing a strong move back to the upside after coming under pressure in early trading. The major averages have all moved well off their lows for the session and into positive territory.
Early profit taking came on the heels of essentially idle figures on employment and GDP. This morning, the Commerce Department released its second estimate of gross domestic product in the second quarter, showing that the figure was unadjusted from the previous report.
Separately, the Labor Department revealed that the number of people filing for first-time unemployment benefits edged down last week, although jobless claims remained at a relatively high level.
On the corporate front, Toll Brothers (TOL) reported a quarterly loss that was much wider than Wall Street estimates, although its revenues beat forecasts, while American Eagle Outfitters' (AEO) earnings came in line with estimates but its revenues fell short.
In other news, FDIC Chairwoman Sheila Bair said that banks are continuing the difficult and necessary process of cleaning up their balance sheets, leading to a $3.7 billion net loss for the second quarter.
While challenges remain, evidence is building that the American economy is starting to grow, Bair said. But she noted, Banking industry performance is, as always, a lagging indicator.
The major averages have slowed their advance in recent dealing, hovering near their highs for the session. The Dow is currently up 54.41 at 9,597.93, the Nasdaq is 2.96 at 2,027.39 and the S&P 500 is up 3.81 at 1,031.93.
A majority of the Dow components have climbed into positive territory, contributing to the rebound by the blue chip index.
Shares of airplane manufacturer Boeing (BA) have helped to lead the Dow higher, posting a gain of 8.7 percent. With the gain, Boeing is poised to end the session at its best closing level in well over two months.
The gain by Boeing comes after the firm announced that the first test flights of its much-delayed 787 Dreamliner are expected by the end of 2009 and the first delivery is expected to occur in the fourth quarter of 2010.
American Express (AXP) is also rising, although by a more modest margin, seeing a gain of 2.9 percent. With the advance, shares of the credit card giant are looking to finish the session at their best price in nearly eleven months.
While Travelers (TRV), Coca-Cola (KO) and a few other stocks are also on the rise, notable weakness is visible in shares of Verizon (VZ), which are falling by 1.2 percent. Despite the retreat, the stock remains stuck in a roughly three-week trading range.
Shares of Wal-Mart (WMT), Exxon Mobil (XOM), and Procter & Gamble (PG) are also posting modest losses, but they also remain stuck in recent trading ranges.
Defense stocks are continuing to see strong gains in mid-afternoon trading, with the Philadelphia Defense Index up by 2.3 percent, looking to close at a ten month high. Along with Boeing, Rockwell Collins (COL) and Northrop Grumman (NOC) are also posting notable gains.
Electronic storage stocks are also on the rise, with the NYSE Arca Disk Drive Index posting a gain of 2.1 percent. The index is rising for the eighth straight session and is poised to finish the day at an eleven month high.
The index is being led by shares of Seagate Technology (STX), which have surged up by 9.7 percent. With the gain, Seagate has risen to its best intraday level in eleven months.
Strength has also emerged among banking, healthcare provider and gold stocks, while notable weakness remains visible among biotechnology stocks, with the NYSE Arca Biotechnology Index down by 2 percent.
Airline, tobacco, and natural gas stocks are also moving lower, although they have moderated their losses amid the turnaround by the broader markets.
In Focus: Economic Data, Corporate News
As mentioned above, the Commerce Departed reported that GDP decreased at an annual rate of 1.0 percent, unchanged from the 1.0 percent decrease originally reported in late July. Economists had been expecting GDP to be revised to show a decrease of 1.5 percent.
Upward revisions to exports, residential fixed investment, consumer spending, and government spending were offset by downward revisions to private inventory investment and nonresidential fixed investment.
In a separate report, the Labor Department revealed that the number of people filing for first-time unemployment benefits edged down to 570,000 in the week ended August 22nd from the previous week's revised figure of 580,000. Economists had been expecting jobless claims to slip to 565,000 from the 576,000 originally reported for the previous month.
Continuing claims, which measure the number of people receiving ongoing unemployment help, fell to 6.133 million for the week ended August 15, the most recent week for which the government has data. The closely watched continuing claims number is now at its lowest level since early April.
On the earnings front, Toll Brothers reported a third-quarter net loss of $2.93 per share compared to a net loss of $0.18 per share in the year ago quarter. Wall Street analysts expected the company to report a loss of $1.74 per share. Revenues for the quarter totaled $461.4 million, which beat forecast of $460.2 million for the quarter.
American Eagle Outfitters reported second quarter net income of $0.14 per share compared to $0.29 per share last year. The earnings came in line with estimates, while quarterly revenues of $657.6 million fell short of the consensus estimate of $659.56 million.
In other news, Microsoft (MSFT) announced that it would reduce the price of its high-end X-Box 360 model by as much as $100 in an effort to match the price of rival Sony (SNE), which reduced the price of its Playstation 3 by a comparable amount last week.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Thursday. Japan's benchmark Nikkei 225 Index slid by 1.6 percent, while Hong Kong's Hang Seng Index closed down by 1 percent.
The major European markets also closed on the downside, with the German DAX Index falling by 1 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index both fell by 0.5 percent on the day.
In the bond markets, treasuries are seeing moderate weakness despite strong results from the Treasury's seven-year note auction. The yield on the benchmark ten-year note is trading at 3.481 percent, rising by 4.3 basis points on the day.
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