Stocks Regain Ground Ahead Of Highly Anticipated Jobs Report - U.S. Commentary

(RTTNews) - Stocks moved moderately higher over the course of the trading session on Thursday after initially showing a lack of direction. The gains on the day partly offset the notable weakness seen in the two previous sessions.

The major averages ended the day firmly in positive territory but off their highs for the session. The Dow climbed 82.08 points or 0.5 percent to 17,924.06, the Nasdaq advanced 25.90 points or 0.5 percent to 4,945.54 and the S&P 500 rose 7.85 points or 0.4 percent at 2,088.00.

The strength that emerged on Wall Street was partly due to bargain hunting following the recent pullback, which dragged the Nasdaq and the S&P 500 down to their lowest closing levels in a month.

A modest recovery by treasuries also generated some buying interest following the sell-off seen in the bond market over the past couple weeks.

Nonetheless, traders seemed somewhat reluctant to make any significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists currently expect the report to show an increase of about 220,000 jobs in April, pushing the unemployment rate down to 5.4 percent.

Yesterday's disappointing private sector jobs data pointed to some downside risk, but Paul Ashworth, Chief U.S. Economist at Capital Economics, said most other labor market indicators suggest Friday's report will show much healthier job growth.

Before the start of trading, the Labor Department released a report showing a slight rebound in initial jobless claims in the week ended May 2nd.

The report said initial jobless claims edged up to 265,000, an increase of 3,000 from the previous week's unrevised level of 262,000. Economists had expected jobless claims to climb to 280,000.

While jobless claims showed a modest increase, they remained close to the fifteen-year low set in the previous week.

Sector News

Housing stocks showed a strong move to the upside over the course of the trading day, driving the Philadelphia Housing Sector Index up by 1.9 percent. The gain by the index came after it held at a three-month closing low in the previous session.

Lennar (LEN), Vulcan Materials (VMC) and Ryland Group (RYL) turned in some of the housing sector's best performances on the day.

Bargain hunting also contributed to considerable strength among commercial real estate stocks, with the Morgan Stanley REIT Index climbing by 1.4 percent after ending Wednesday's trading at its lowest closing level in six months.

Electronic storage, airline, and semiconductor stocks also moved notably higher on the day, while significant weakness was visible among oil service stocks.

Reflecting the weakness in the oil service sector, the Philadelphia Oil Service Index tumbled by 2.7 percent. The losses by oil service stocks came as crude oil for June delivery fell $1.99 to $58.94 a barrel.

Steel, natural gas, and tobacco stocks also came under pressure on the day, helping to limit the upside for the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw further downside during trading on Thursday. Reopening following the Golden Week holidays, Japan's Nikkei 225 Index tumbled by 1.2 percent, while Hong Kong's Hang Seng Index slumped by 1.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.5 percent, the French CAC 40 Index dipped by 0.3 percent and the U.K.'s FTSE 100 Index fell by 0.7 percent.

In the bond market, treasuries regained some ground after falling sharply over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.6 basis points to 2.184 percent.

Looking Ahead

The monthly jobs report is likely to be in the spotlight on Friday, overshadowing a separate report on wholesale inventories.

On the earnings front, CBS (CBS), Con Edison (ED), Crocs (CROX), and Nvidia (NVDA) are among the companies due to report their quarterly results after the close of today's trading.