Stocks Close Mostly Higher As Traders Digest Fed, Data - U.S. Commentary

(RTTNews) - After initially turning in a lackluster performance, stocks moved mostly higher over the course of the trading session on Thursday. The gains on the day once again lifted the major averages to their best closing levels in over two months.

The major averages gave back some ground going into the close but still ended the day in positive territory. The Dow advanced 155.73 points or 0.9 percent to 17,481.49, the Nasdaq edged up 11.02 points or 0.2 percent to 4,774.99 and the S&P 500 climbed 13.37 points or 0.7 percent to 2,040.59.

The strength that emerged on Wall Street came as traders continued to digest the Federal Reserve's monetary policy announcement from Wednesday.

As was widely expected, the Fed left interest rates unchanged in a range from 0.25 percent to 0.50 percent, although Kansas City Fed President Esther George preferred raising rates by a quarter point.

The central bank's revised forecast for interest rates also shows that officials now expect two rate hikes by the end of this year compared to the four predicted back in December.

The new median projection calls for rates at 0.9 percent at year's end, down from the previous estimate of 1.4 percent.

Traders were also reacting to the latest U.S. economic data, including a report from the Philly Fed showing an unexpected expansion in regional manufacturing activity in the month of March.

The Philly Fed said its diffusion index for current activity jumped to a positive 12.4 in March from a negative 2.8 in February, with a positive reading indicating growth in regional manufacturing activity.

The index recorded its first positive reading in seven months, while economists had expected a much more modest increase to a negative 1.4.

A separate report from the Labor Department showed a smaller than expected rebound in initial jobless claims in the week ended March 12th.

The report said jobless claims rose to 265,000, an increase of 7,000 from the previous week's revised level of 258,000. Economists had expected jobless claims to climb to 270,000.

Meanwhile, the Conference Board released a report showing that its index of leading economic indicators inched up by 0.1 percent in February compared to expectations for a 0.2 percent increase.

Sector News

Partly reflecting optimism about the outlook for demand, steel stocks showed a substantial move to the upside on the day. The NYSE Arca Steel Index surged up by 5 percent to its highest closing level in five months.

Brazil's CSN (SID), Cliffs Natural Resources (CLF), Gerdau (GBB), and Schnitzer Steel (SCHN) turned in some of the sector's best performances on the day.

Oil service stocks also moved sharply higher over the course of the trading session, driving the Philadelphia Oil Service Index up by 3.5 percent.

The strength in the oil service sector came as the price of crude oil for April delivery jumped $1.74 to a three-month closing high of $40.20 a barrel.

Considerable strength was also visible among transportation stocks, as reflected by the 3 percent gain by the Dow Jones Transportation Average. With the gain, the average reached its best closing level in well over three months.

Delivery giant FedEx (FDX) helped to lead the transportation sector higher, soaring by 11.8 percent after reporting better than expected third quarter results.

Brokerage, chemical, networking, and housing stocks also moved notably higher, while gold stocks bucked the uptrend on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday. Hong Kong's Hang Seng Index and China's Shanghai Composite Index both surged up by 1.2 percent. However, Japan's Nikkei 225 Index bucked the uptrend and edged down by 0.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index fell by 0.5 percent and the German DAX Index slid by 0.9 percent.

In the bond market, treasuries extended the upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 3.5 basis points to 1.903 percent.

Looking Ahead

The economic calendar for Friday is relatively quiet compared to the past few days, although a report on consumer sentiment may still attract some attention.

On the earnings front, Adobe Systems (ADBE) and Aeropostale (ARO) are due to report their quarterly results after the close of today's trading.