Stimulus Optimism Leads To Strength On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly higher during trading on Thursday after ending the previous session on opposite sides of the unchanged line. The gains on the day lifted the Dow and the S&P 500 to new record closing highs, while the Nasdaq reached its best closing level of 2016.

The major averages ended the day firmly in positive territory but off their highs for the session. The Dow advanced 134.29 points or 0.7 percent to 18,506.41, the Nasdaq climbed 28.33 points or 0.6 percent to 5,034.06 and the S&P 500 rose 11.32 points or 0.5 percent to 2,163.75.

The strength on Wall Street extended the upward trend seen over the past several sessions, as traders expressed continued optimism about additional monetary stimulus from central banks.

Speculation regarding new rounds of both fiscal and monetary stimulus in Japan led to a notable decline in the value of the Japanese yen.

The U.S. dollar traded at 105.41 yen compared to the 104.49 yen it fetched at the close of New York trading on Wednesday.

Earlier in the day, the Bank of England unexpectedly refrained from cutting interest rates but signaled more action next month after policymakers get more assessments on economic growth.

Economists had widely expected the BoE to cut rates by 25 basis points due to uncertainty arising from Britain's vote to leave the European Union.

On the U.S. economic front, the Labor Department released a report this morning showing that initial jobless claims unexpectedly came in flat in the week ended July 9th.

The report said initial jobless claims came in at 254,000, unchanged from the previous week's unrevised level. Economists had expected jobless claims to climb to 265,000.

A separate Labor Department report showed that producer prices rose by more than expected in the month of June, with energy prices showing another substantial increase.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in June after rising by 0.4 percent in May. The index had been expected to increase by 0.3 percent.

Excluding food and energy prices, core producer prices rose by 0.4 percent in June following a 0.3 percent increase in May. Economists had expected core prices to edge up by 0.2 percent.

Sector News

Extending a recent upward trend, airline stocks moved notably higher over the course of the trading session. The NYSE Arca Airline Index surged up by 2.1 percent to its best closing level in well over two months.

LATAM Airlines (LFL), United Continental (UAL), and American Airlines (AAL) turned in some of the airline sector's best performances on the day.

Significant strength was also visible among banking stocks, as reflected by the 1.6 percent gain posted by the Dow Jones Banks Index. The strength in the sector came after JPMorgan Chase (JPM) reported better than expected second quarter results.

Railroad stocks also showed a strong move to the upside, resulting in a 1.3 percent advance by the Dow Jones Railroads Index. With the gain, the index reached a nine-month closing high.

Chemical, brokerage, and oil service stocks also saw notable strength on the day, while weakness was visible among electronic storage stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index jumped by 1 percent, while China's Shanghai Composite Index slipped by 0.2 percent.

Meanwhile, most European stocks moved higher on the day, although the U.K.'s FTSE 100 Index bucked the uptrend and edged down by 0.2 percent. The French CAC 40 Index and the German DAX Index surged up by 1.2 percent and 1.4 percent, respectively.

In the bond market, treasuries moved back to the downside following the rebound seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.3 basis points to 1.531 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to a slew of U.S. economic data, including reports on retail sales, industrial production, and consumer prices.

Additionally, financial giants Citigroup (C), Wells Fargo (WFC), and U.S. Bancorp (USB) are among the companies due to report their quarterly results before the start of trading.