Stocks Extend Upward Move In Reaction To Fed Statement - U.S. Commentary

(RTTNews) - After ending the previous session mostly higher following the Federal Reserve's monetary policy announcement, stocks saw further upside during trading on Thursday. The gains on the day lifted the Dow and the S&P 500 to new record closing highs.

The major averages ended the day firmly in positive territory, near their highs for the session. The Dow jumped 109.14 points or 0.6 percent to 17,265.99, the Nasdaq advanced 31.24 points or 0.7 percent to 4,593.43 and the S&P 500 climbed 9.79 points or 0.5 percent to 2,011.36.

The continued strength on Wall Street partly reflected easing concerns about the outlook for interest rates following yesterday's Fed statement.

In the statement, the Fed reiterated its pledge to keep rates low for a "considerable time" as well as its assessment that "there remains significant underutilization of labor resources."

Meanwhile, traders seemed to shrug off an increase in the median interest rate projections, as the five Fed governors are seen as far more dovish than the regional presidents.

Buying interest was also generated by a report from the Labor Department showing a sharp pullback in initial jobless claims in the week ended September 13th.

The report said initial jobless claims tumbled to 280,000, a decrease of 36,000 from the previous week's revised level of 316,000. Economists had been expecting jobless claims to edge down to 305,000.

With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 279,000 in the week ended July 19th, which was the lowest since May of 2000.

On the other hand, the Commerce Department released a separate report showing that housing starts fell by much more than expected in the month of August.

The Commerce Department said housing starts plummeted 14.4 percent to a seasonally adjusted annual rate of 956,000 in August after jumping 22.9 percent to a revised July estimate of 1.117 million.

A report from the Philadelphia Federal Reserve also showed that its index of regional manufacturing activity pulled back off a three-year high in September.

Sector News

Banking stocks showed a strong move to the upside over the course of the trading day, driving the Dow Jones Banks Index up by 1.5 percent. The gain extended a recent upward trend by the index, which reached a nearly six-year closing high.

Industry giants Citigroup (C), Bank of America (BAC), and JP Morgan (JPM) turned in some of the banking sector's best performances of the day.

Considerable strength was also visible among airline stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Airline Index. The strength in the oil-sensitive sector came as crude for October delivery tumbled $1.35 to $93.07 a barrel.

Semiconductor stocks also saw significant strength, resulting in a 1.5 percent advance by the Philadelphia Semiconductor Index. With the gain, the index reached its best closing level in thirteen years.

Brokerage, networking, and computer hardware stocks also posted notable gains, while gold stocks saw further downside amid a decrease by the price of the precious metal.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved higher on Thursday. Japan's Nikkei 225 Index jumped by 1.1 percent, while China's Shanghai Composite rose by 0.4 percent. However, Hong Kong's Hang Seng Index bucked the uptrend and fell by 0.9 percent.

The major European markets all moved to the upside on the day. While the German DAX Index surged up by 1.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index advanced by 0.8 percent and 0.6 percent, respectively.

In the bond market, treasuries moved moderately lower, extending a recent downward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to a two-month closing high of 2.629 percent.

Looking Ahead

The Conference Board is scheduled to release its report on leading economic indicators on Friday, although trading activity may be somewhat subdued as traders continue to digest the Fed statement.

Nonetheless, trading could be impacted by reaction to earning news from Oracle (ORCL), with the business software giant releasing its fiscal first quarter results after the close of today's trading.