Better sentiment toward the financial sector and encouraging economic news drove stocks substantially higher on Thursday, allowing Wall Street to close out the holiday-shortened week on a high note.
Strong preliminary results from banking giant Wells Fargo (WFC) gave hope that the financials were not a lost cause, and some better-than-expected economic data contributed to the improved sentiment.
The Dow finished the week above the 8,000 mark after a bout of profit-taking earlier in the week sparked doubt about the market's ability to hold this level. Trading is closed on Friday for the Good Friday holiday, with investors looking ahead to the influx of corporate earnings that will begin in earnest next week, as well as to some important economic news.
The Dow closed Thursday's trading higher by 246.27 at 8,083.38. The Nasdaq ended the session with a gain of 61.88 at 1,652.54 and the S&P 500 was up 31.40 points by the market close, at 856.56.
Wells Fargo released preliminary first quarter results that crushed what analysts were expecting. The company said it now expects to report first-quarter earnings of $3 billion or $0.55 per share compared to analyst estimates of $0.23 per share.
Additionally, Barclays plc (BCS) helped lead financials higher after the company announced an agreement for the sale of its iShares business to Blue Sparkle LP, a new limited partnership established by CVC Capital Partners Group SICAV-FIS S.A. The purchase price for the deal was about $4.4 billion.
In economic news, a report from the Labor Department showed that jobless claims fell to 654,000 from the previous week's revised figure of 674,000. Economists had expected jobless claims to edge down to 660,000 from the 669,000 originally reported for the previous week.
However, the Labor Department also said that continuing claims rose to a new record high of 5.840 million in the week ended March 28th from the preceding week's revised level of 5.745 million.
Additionally, the Commerce Department said that the U.S. trade deficit narrowed to $26.0 billion in February from $36.2 billion in January. Economists had been expecting the trade deficit to come in at $36.0 billion.
In an interview with RTT News, Art Hogan, chief market analyst at Jefferies & Company called the advance something more substantial than a near term rally in a bear market.
Hogan said that the market has a path of least resistance to the upside, though warned it will be working its way through a lot of noise over the next several weeks.
Hogan predicts that the first quarter earnings season is going to be bad, but better than expected and said once the reporting season is over and second quarter estimates are adjusted, the market will continue its rally into the middle of the year.
While most of the major sectors posted substantial gains on the day, the rise in the broader markets was led by financial stocks. Banking shares turned in some of the biggest gains, driving the Kbw Bank Index up 20.1 percent by the market close.
With the advance, the index closed at its highest level in nearly three months.
Real estate, housing and brokerage stocks also experienced considerable gains on the session. The Morgan Stanley REIT Index and the Philadelphia Housing Index ended the session with gains of 13.6 percent and 9 percent, respectively. The Amex Securities Broker/Dealer Index finished the trading day 10 percent higher.
Steel, airline, and electronic storage stocks also saw noteworthy gains.
At the other end of the spectrum, gold stocks were some of the only losers by the end of the trading session, with the Amex Gold Bugs Index falling 1 percent on the day. The decline came as investors responded to a weakness in the price of gold, which closed down $4.10 per ounce at $881.80.
Modest losses were also suffered by some stocks in the utility and pharmaceutical sectors.
Following suit with the broader markets, the Dow's gain was led by its financial components. One of the major contributors to the advance was JP Morgan (JPM), whose 19.4 percent advance took the stock well over some recent resistance and to its highest closing level in nearly four months.
Bank of America (BAC), American Express (AXP), and Citigroup (C) also posted considerable gains on the heels of the Wells Fargo news. Bank of America ended the session 35.3 percent higher, while American Express and Citigroup posted gains of 19.8 percent and 12.6 percent, respectively.
Caterpillar (CAT), General Electric (GE), and Alcoa (AA) also experienced notable gains on the day.
Meanwhile, Wal-Mart (WMT) suffered one of the widest losses of the blue chip stocks, closing down 3.7 percent after the company released sales results that failed to impress investors.
Merck (MRK) also fell considerably during the session, closing with a loss of 1.7 percent.
In overseas trading, stock markets across the Asia-Pacific region showed strong upward moves on Thursday, benefiting from some optimism about the outlook for the global economy. Japan's benchmark Nikkei 225 Index closed up 3.7 percent.
The major European markets also ended Thursday's session higher, with the U.K.'s FTSE 100 Index closing up 1.5 percent, while the French CAC 40 Index and the German DAX Index posted gains of 1.8 percent and 3.1 percent, respectively.
In the bond market, treasuries ultimately closed off their lows of the day, but held below the unchanged line. The yield on the benchmark 10-year note finished Thursday's session up 7.9 basis points at 2.926 percent.
Markets will be closed for the Good Friday holiday. Still, there is one economic report due out. The federal government's monthly budget statement will be released at 2 p.m. ET.
When traders get back to work on Monday, they can mull quarterly reports from Christopher & Banks, Streamline Health Solutions and Chevron that came after Thursday's closing bell.
Monday's economic calendar is light, but some key data is on the horizon. PPI and retail sales data is planned for Tuesday and consumer price index data is on the docket for Wednesday.
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