Bargain Hunting Contributes To Strength On Wall Street - U.S. Commentary

(RTTNews) - After trending lower in recent sessions, stocks showed a strong move back to the upside during trading on Thursday. Traders largely shrugged off a more than three-hour halt of trading on the Nasdaq, holding on to strong gains.

The major averages all ended the day firmly positive, although the Dow underperformed its counterparts. The Dow rose 66.19 points or 0.4 percent to 14,963.74, while the Nasdaq jumped 38.92 points or 1.1 percent to 3,638.71 and the S&P 500 advanced 14.16 points or 0.9 percent to 1,656.96.

Bargain hunting contributed to the strength on Wall Street, with some traders picking up stocks at reduced levels following the recent weakness.

The gains being posted by the Dow and the S&P 500 came after they ended the previous session at their lowest closing levels in well over a month.

Positive sentiment was also generated by upbeat manufacturing data out of both China and Europe, with a report from Markit Economics and HSBC showing that Chinese manufacturing activity expanded in August after contracting in the three previous months.

Traders also reacted positively to a report from the U.S. Labor Department showing that initial jobless claims bounced off the more than five-year low set in the previous week.

The Labor Department said initial jobless claims rose to 336,000 in the week ended August 17th, an increase of 13,000 from the previous week's revised figure of 323,000.

While claims came in above economist estimates, the less volatile four-week moving average showed another modest decrease and hit its lowest level since November of 2007.

A separate report from the Conference Board showed that its leading economic indicators index rose by slightly more than expected in the month of July.

As mentioned above, a computer malfunction led to a halt of all trading on the Nasdaq for much of the afternoon, although traders largely seemed unfazed by the news.

Meanwhile, shares of Hewlett-Packard (HPQ) came under pressure on the day, limiting the upside for the Dow. HP tumbled by 12.5 percent after the tech giant reported third quarter adjusted earnings and revenues that fell year-over-year.

The company also raised its full-year earnings outlook, but CEO Meg Whitman said year-over-year revenue growth is "unlikely" due to weakness in the enterprise unit.

Sector News

With the upbeat Chinese manufacturing data generating optimism about the outlook for steel demand, steel stocks saw significant strength. The NYSE Arca Steel Index surged up by 2.7 percent after trending lower over the past few sessions.

Mechel (MTL) and Cliffs Natural Resources (CLF) turned in two of the steel sector's best performances, advancing by 7.3 percent and 5.8 percent, respectively.

Transportation stocks also turned in a strong performance on the day, resulting in a 2 percent gain by the Dow Jones Transportation Average. Matson (MATX), Con-way (CNW), and Delta Air Lines (DAL) posted notable gains.

Commodities-related stocks also saw considerable strength on the news out of China, with natural gas, gold, and oil service stocks showing strong moves to the upside.

Banking, housing, and software stocks also saw significant strength on the day, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index ended the day down by 0.3 percent.

Meanwhile, the major European markets showed notable moves to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.9 percent, the French CAC 40 Index and the German DAX Index jumped by 1.1 percent and 1.4 percent, respectively.

In the bond market, treasuries pulled back firmly into negative territory, extending a recent downward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.6 basis points to a two-year closing high of 2.901 percent.

Looking Ahead

Economic data is likely to attract attention on Friday, as the Commerce Department is scheduled to release its monthly report on new home sales.