Data Helps Stocks Continue To Recover From Monday's Sell-Off - U.S. Commentary

(RTTNews) - Stocks moved sharply higher during trading on Thursday, more than offsetting the weakness seen in the previous session and continuing to recover from Monday's sell-off. The markets benefited from a positive reaction to the latest batch of U.S. economic data.

The major averages remained firmly positive going into the close, ending the session near their best levels of the day. The Dow soared 188.30 points or 1.2 percent to 15,628.53, the Nasdaq jumped 45.56 points or 1.1 percent to 4,057.12 and the S&P 500 shot up 21.79 points or 1.2 percent to 1,773.43.

The strength on Wall Street was partly due to the release of a report from the Labor Department showing a bigger than expected drop in initial jobless claims in the week ended February 1st.

The report said initial jobless claims fell to 331,000, a decrease of 20,000 from the previous week's revised figure of 351,000. Economists had expected jobless claims to drop to 337,000.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, last week seems like an anomaly, as the 331,000 print this week is about in line with the average in the first three weeks of January of 328,000."

The data may have generated some optimism about tomorrow's monthly jobs report from the Labor Department, which is expected to show a recovery in January following the anemic job growth reported for December.

A separate Labor Department report said labor productivity rose by 3.2 percent in the fourth quarter following a revised 3.6 percent increase in the third quarter. Economists had expected productivity to rise by about 2.6 percent.

At the same time, the report said unit labor costs dropped by 1.6 percent in the fourth quarter after falling by 2.0 percent in the third quarter. Costs had been expected to decrease by 0.7 percent.

Meanwhile, the Commerce Department also released a report showing that the U.S. trade deficit widened by more than expected in the month of December.

Among individual stocks, shares of Disney (DIS) moved notably higher after the entertainment giant reported better than expected first quarter earnings due in part to the strong performance by its animated hit film "Frozen."

Cloud services provider Akamai Technologies (AKAM) also turned in a strong performance after reporting fourth quarter results that exceeded analyst estimates.

On the other hand, shares of Twitter (TWTR) came under pressure after the social media giant reported an unexpected fourth quarter profit but on slower user growth.

Sector News

While most of the major sectors moved to the upside, housing stocks posted particularly strong gains on the day. Reflecting the strength in the housing sector, the Philadelphia Housing Sector Index surged up by 3.1 percent.

Vulcan Materials (VMC) helped to lead the housing sector higher, with the construction materials producer jumping 9.1 percent after reporting strong fourth quarter earnings growth.

Significant strength was also visible among steel stocks, as reflected by the 2.9 percent gain posted by the NYSE Arca Steel Index. With the gain, the index continued to recover from Monday's five-month closing low.

Networking stocks also showed a strong move to the upside on the day, driving the NYSE Arca Networking Index up by 2.4 percent. Alcatel-Lucent (ALU) posted a standout gain after reporting its first quarterly profit in two years and revealing it received an offer for its enterprise business.

Airline, oil service, retail, and banking stocks also saw notable strength amid broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although Japan's Nikkei 225 Index bucked the uptrend and edged down by 0.2 percent. Hong Kong's Hang Seng Index advanced 0.7 percent and Australia's All Ordinaries Index jumped 1.2 percent.

The major European markets also showed notable moves to the upside on the day. While the German DAX Index surged up by 1.5 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index soared by 1.6 percent and 1.7 percent, respectively.

In the bond market, treasuries closed lower for the third straight session, pulling back further off their recent highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 2.702 percent.

Looking Ahead

Friday's trading is likely to be driven by reaction to the Labor Department's monthly jobs report. Economists expect an increase of about 180,000 jobs in January, while the unemployment rate is expected to remain at 6.7 percent.