Stocks Extend Recovery Rally Amid Continued Bargain Hunting - U.S. Commentary

(RTTNews) - Stocks moved sharply higher during trading on Thursday, extending the recovery rally seen over the course of the previous session. The gains on the day further offset the sell-off that was seen over the past couple weeks.

The major averages gave up some of their gains in mid-afternoon trading but moved back to the upside going into the close. The Dow surged up 369.26 points or 2.3 percent to 16,654.77, the Nasdaq jumped 115.17 points or 2.5 percent to 4,812.71 and the S&P 500 shot up 47.15 points or 2.4 percent to 1,987.66.

The continued strength on Wall Street came as stocks once again benefited from bargain hunting following the steep drop seen over the six sessions preceding Wednesday.

The gains posted yesterday helped to lift the major averages well off the multi-month lows set on Tuesday, but they also remain well off their recent highs.

A rally by Chinese stocks also generated some positive sentiment, with the Shanghai Composite Index soaring by 5.3 percent after falling sharply in recent sessions.

Traders were also reacting to the latest batch of U.S. economic data, including a report showing much stronger than previously estimated economic growth in the second quarter.

The Commerce Department said real gross domestic product increased by 3.7 percent in the second quarter compared to the previously reported 2.3 percent growth.

With the upward revision, the pace of GDP growth in the second quarter was even stronger than the 3.2 percent jump expected by economists.

A separate report from the Labor Department also showed a modest decrease in initial jobless claims in the week ended August 22nd.

Meanwhile, the National Association of Realtors released a report showing that pending home sales rebounded less than expected in July.

Sector News

Most of the major sectors saw significant strength on the day, although resource stocks helped to lead the markets higher.

Oil service stocks posted particularly strong gains, driving the Philadelphia Oil Service Index up by 6.5 percent. With the gain, the index climbed further off the six-year closing low it set on Tuesday.

The rally by oil service stocks came amid a sharp increase by the price of crude oil, with crude for October delivery surging up $3.96 to $42.56 a barrel.

Outside of the resource sector, substantial strength was also visible among semiconductor stocks, as reflected by the 3.7 percent gain posted by the Philadelphia Semiconductor Index.

SunEdison (SUNE), Avago Technologies (AVGO), and Micron (MU) turned in some of the semiconductor sector's best performances.

Railroad, electronic storage, chemical, and telecom stocks also showed notable moves to the upside amid broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably higher following the overnight rally on Wall Street. Japan's Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index shot up by 3.6 percent.

The major European markets also saw significant strength on the day. While the German DAX Index jumped by 3.2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index soared by 3.5 percent and 3.6 percent, respectively.

In the bond market, treasuries ended the day roughly flat following a relatively lackluster trading session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.168 percent.

Looking Ahead

Trading on Friday may be impacted by another batch of U.S. economic data, including reports on personal income and spending and consumer sentiment.