RTTNews - Following an initial retreat on the heels of relatively uneventful economic reports, stocks staged a steady recovery and finished with modest gains on Thursday. The major averages all closed in positive territory, but the upside was limited by another low volume session.

Earlier, traders focused on a fresh batch of economic reports, with the Commerce Department revealing that second quarter GDP decreased at an annual rate of 1.0 percent in the second quarter, unchanged from the 1.0 percent decrease initially reported. Economists had been expecting GDP to be revised to show a decrease of 1.5 percent.

The Commerce Department said 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.

Separately, the number of people filing for first-time unemployment benefits edged down last week, according to a report released by the Labor Department, although jobless claims remain at a relatively high level.

The report showed that jobless claims edged down to 570,000 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.

A variety of sectors turned higher after moving lower earlier in the session, contributing to the recovery by the broader markets. Nonetheless, stocks were unable to sustain the upward move amid some uncertainty about the economic outlook.

The major averages moved off of their highs in late session dealing, but they were able to hold onto modest gains. The Dow advanced by 37.11 points or 0.4 percent to 9,580.63, the Nasdaq gained 3.30 points or 0.2 percent to close at 2,027.73 and the S&P 500 rose by 2.86 points or 0.3 percent to 1,030.98.

Sector News

Electronic storage stocks saw some of the day's strongest performances, with the NYSE Arca Disk Drive Index posting a gain of 2.4 percent on the day. The index rose for the eighth straight session and finished the session at an eleven-month closing high, propelled by shares of Seagate Technology (STX), which surged by 12 percent.

Defense stocks also saw strong gains, with the Philadelphia Defense Sector Index rising by 2 percent. The advance helped the index to finish the trading day at its highest price in ten months.

The index was boosted by shares of Boeing (BA), Rockwell Collins (COL) and Northrop Grumman (NOC), which all rose by notable margins.

A recovery by gold, computer hardware and banking stocks, among others, also helped to push the major averages into positive territory.

On the other hand, biotechnology and airline stocks remained stuck in the red. The NYSE Arca Biotechnology Index fell by 2.2 percent, backing off of the all-time closing high it set on Wednesday, while the NYSE Arca Airline Index slipped by 1.5 percent loss, falling off the seven and a half month closing high it set in the previous session.

Dow Components

Shares of airplane manufacturer Boeing led the Dow higher, posting a gain of 8.4 percent. With the gain, Boeing ended the session at its best closing level in well over two months.

The gain by Boeing came 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) also rose, although by a more modest margin, recording a gain of 2.5 percent. With the advance, shares of the credit card giant finished the day at their best price in nearly eleven months.

While Alcoa (AA) and Travelers (TRV) also gained, notable weakness was visible in shares of Verizon (VZ), which slid by 1.4 percent. Despite the loss, the stock remained stuck in a roughly three-week trading range.

Shares of Wal-Mart (WMT), Exxon Mobil (XOM), and Procter & Gamble (PG) also fell, but they also remain stuck in recent trading ranges.

Other Markets

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, the benchmark ten-year note saw a volatile session and ended the day modestly lower. Subsequently, the yield on the note, which moves opposite of its price, finished at 3.462 percent, posting a gain of 2.4 basis points.

Looking Ahead

To close out the week, traders will focus on the Commerce Department's report on personal income and spending in the month of July. Income is expected to edge up 0.1 percent, while spending is expected to increase by 0.2 percent. The data is scheduled for release at 8:30 a.m. ET.

Shortly after the opening bell, Reuters and the University of Michigan will issue the results of their final consumer sentiment survey for August. The headline consumer sentiment index is expected to climb to 64.0 from the mid-month reading of 63.2, although it is still expected to be lower than July's reading of 66. The report will be release at 9:55 a.m. ET.

On the corporate front, traders will have a chance to react to earnings from tech firms Dell (DELL) and Novell (NOVL), along with specialty retailer Tiffany & Co. (TIF).

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