Stocks are showing considerable strength during mid-morning trading on Thursday, as investors shrug off some disappointing unemployment and react positively to the monthly report on factory orders. Investors are also keeping an eye on London as the G20 summit continues.
In economic news, the Labor Department released its report on initial jobless claims in the week ended March 28th on Thursday, showing an unexpected increase in first time claims for unemployment benefits.
The report showed that initial jobless claims rose to 669,000 from the previous week's revised figure of 657,000. Economists had expected jobless claims to edge down to 650,000 from the 652,000 originally reported for the previous week.
Additionally, the number of individuals needing continued unemployment help climbed to another new record of 5.728 million in the week ended March 21 from the previous week's revised reading of 5.567 million.
Peter Boockvar, equity strategist at Miller Tabak, said, This, on the heels of the very weak ADP report yesterday, certainly sets us up for a poor government payroll figure tomorrow.
However, Boockvar noted, The market action of late is evidence that participants are looking past this employment data and placing their chips on the 'worst is over' belief and the still worsening labor market is a lagging indicator.
Separately, the Commerce Department released a report showing that factory orders rose 1.8 percent in February following a revised 3.5 percent decrease in January. The rebound in February marked the first increase in factory orders in seven months.
In other news, the G20 summit has gotten underway, with President Obama saying that disputes over government spending plans and efforts to overhaul financial regulations will not delay significant action as world leaders address the worst worldwide economic downturn since World War II.
Additionally, world leaders may pledge to regulate major hedge funds and establish a new oversight board to monitor the global financial system, reports said citing a draft of the G-20 communiqué. The leaders would vow to cooperate over economic policies to restore global growth and refrain from competitive devaluation of their currencies.
Meanwhile, the House of Representatives voted 247-171 Wednesday to give the Treasury Department the power to restrict bonuses and compensation at companies receiving government bailout money.
In recent trading, the major averages have pulled back off their best levels of the day, although they remain firmly positive. The Dow is currently up 182.55 at 7,944.15, the Nasdaq is up 40.86 at 1,592.46 and the S&P 500 is up 19.69 at 830.77.
Following the broad based turnaround seen over the course of the previous session, most of the major sectors are seeing some further upside.
Stocks in the railroad sector are turning in some of the best performances, driving the Dow Jones Railroads Index up 7.8 percent. With the gain, the index has risen to its best intraday level in over a month and a half.
Other transportation stocks are also showing notable strength, helping to push the Dow Jones Trucking Index and the Amex Airline Index up 5.9 percent and 5.3 percent, respectively.
Steel, oil service, and banking are also posting notable gains, with the Amex Steel Index currently up 7.2 percent, while the Philadelphia Oil Services Index and the Dow Jones Banks Index are posting gains of 4.9 percent and 4.5 percent, respectively.
At the other end of the spectrum, gold stocks are showing some of the only declines on the day, with the Amex Gold Bugs Index posting a loss of 5.2 percent on the day. The weakness among gold stocks comes amid a notable decrease by the price of the precious metal.
Stocks Driven By Analyst Comments
Pepsi Bottling Group (PBG) is posting a gain of 8.4 percent on the day following an upgrade at Deutsche Bank. With the advance, the stock has climbed to its highest level in nearly six months.
Along with Pepsi Bottling Group, Dr Pepper Snapple (DPS) was also upgraded by Deutsche Bank and is subsequently up 7.2 percent. Both stocks were lifted to Buy from Hold.
Additionally, Commscope (CTV) is posting a gain of 20 percent after being upgraded to Outperform from Neutral at Robert W. Baird. The stock's price target was also lifted to $19 from $10.
Meanwhile, Advance Auto Parts (AAP) is down 2.5 percent on the day after the auto parts retailers were cut, as a whole, to Hold from Buy at Citi Investment Research. AutoZone (AZN) is also suffering a loss on the downgrade, down 0.5 percent.
In overseas trading, stocks markets across the Asia-Pacific region turned in strong performances amid some optimism about the outlook for the economy. Hong Kong's Hang Seng surged up more than 1,000 points or 7.4 percent.
The major European markets are also showing substantial strength, with the French CAC 40 Index and the German DAX Index posting gains of 4.4 percent and 4.8 percent, respectively, while the U.K.'s FTSE 100 Index is up 3.3 percent.
In the bond market, treasuries are showing notable weakness on the day, holding near their lows for the session. Subsequently, the yield on the benchmark 10-year note is up 4.1 basis points at 2.699 percent.
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