Stocks Regain Ground Following Recent Weakness - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Thursday, regaining some ground after falling sharply over the past several sessions.

The major averages ended the session in positive territory but off their best levels of the day. The Dow climbed 115.94 points or 0.7 percent to 15,882.68, the Nasdaq inched up 0.37 points or less than 0.1 percent to 4,472.06 and the S&P 500 rose 9.66 points or 0.5 percent at 1,868.99.

The strength on Wall Street was partly due to bargain hunting, as traders pick up stocks at reduced levels following the recent weakness.

The gains by the major averages came after they ended the previous session at their lowest closing levels in over a year.

Traders were also reacting to the latest monetary policy announcement from the European Central Bank, which left interest rates unchanged.

In his subsequent press conference, ECB President Mario Draghi noted downside risks have increased and said the bank would review and possibly reconsider its monetary policy stance at the next meeting in early March.

On the U.S. economic front, the Labor Department released a report before the start of trading showing an unexpected increase in initial jobless claims in the week ended January 16th.

The report said initial jobless claims climbed to 293,000, an increase of 10,000 from the previous week's revised level of 283,000.

The increase came as a surprise to economists, who had expected jobless claims to drop to 275,000 from the 284,000 originally reported for the previous week.

With the unexpected increase, jobless claims rose to their highest level since reaching 296,000 in the week ended July 4th.

A separate report from the Federal Reserve Bank of Philadelphia showed that manufacturing conditions in the Philadelphia region contracted modestly in January.

The Philly Fed said its diffusion index for current activity increased to a negative 3.5 in January from a negative 10.2 in December, although a negative reading indicates a contraction in regional manufacturing activity.

Sector News

Energy stocks saw substantial strength on the day, benefiting from a notable increase by the price of crude oil. Crude for March delivery climbed $1.18 to $29.53 a barrel.

The increase by the price of crude oil came following the release of a report from the Energy Information Administration showing an unexpected decrease in distillate fuel inventories.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index surged up by 9 percent, while the Philadelphia Oil Service Index jumped by 3.8 percent and the NYSE Arca Oil & Gas Index advanced by 2.8 percent.

Considerable strength was also visible among telecom stocks, as reflected by the 1.8 percent gain posted by the NYSE Arca Telecom Index. The gain by the index came after it ended the previous session at a four-year closing low.

Trucking, semiconductor, gold and airline stocks also saw significant strength, while notable weakness was visible among biotechnology, railroad and brokerage stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw considerable weakness during trading on Thursday. Japan's Nikkei 225 Index plunged by 2.4 percent, while Hong Kong's Hang Seng Index slumped by 1.8 percent.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.'s FTSE 100 Index shot up by 1.8 percent, the German DAX Index and the French CAC 40 Index jumped y 1.9 percent and 2 percent, respectively.

In the bond market, treasuries gave back some ground after moving sharply higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 2.019 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to U.S. reports on existing home sales and leading economic indicators.

On the earnings front, American Express (AXP), E*Trade (ETFC), and Starbucks (SBUX) are among the companies releasing their quarterly results after the close of today's trading.

General Electric (GE) is also scheduled to release its fourth quarter results before the start of trading on Friday.