Stocks See Modest Strength, S&P 500 Sets New Record High - U.S. Commentary

(RTTNews) - Stocks moved modestly higher during trading on Thursday, although buying interest was somewhat subdued. With the upward move, the S&P 500 ended the session at a new record closing high, while the Nasdaq closed just shy of a new high.

The major averages all closed in positive territory, although the Dow inched up only 0.34 points to 18.285.74. The Nasdaq climbed 19.05 points or 0.4 percent to 5,090.79 and the S&P 500 rose 4.97 points or 0.2 percent to 2,130.82.

The strength on Wall Street came in reaction to the latest batch of U.S. economic data even though the reports painted a mixed picture.

Not long after the start of trading, the National Association of Realtors released a report showing an unexpected drop in existing home sales in the month of April.

NAR said existing home sales fell 3.3 percent to an annual rate of 5.04 million in April from 5.21 million in March, while economists had expected existing home sales to edge up to 5.24 million

Meanwhile, the Conference Board said its index of leading economic indicators rose by much more than expected in April.

The Conference Board said its leading economic index advanced by 0.7 percent in April after climbing by an upwardly revised 0.4 percent in March. Economists had expected the index to rise by 0.3 percent.

"April's sharp increase in the LEI seems to have helped stabilize its slowing trend, suggesting the paltry economic growth in the first quarter may be temporary," said Ataman Ozyildirim, Economist at The Conference Board.

He added, "However, the growth of the LEI does not support a significant strengthening in the economic outlook at this time."

Before the start of trading, the Labor Department released a report showing a bigger than expected increase in weekly jobless claims, although the four-week average still dropped to a fifteen-year low.

The positive reaction to the economic reports may partly have reflected the fact that treasuries moved higher on the data, leading to a drop in bond yields.

Nonetheless, traders seemed reluctant to make any significant moves ahead of the release of a report on consumer price inflation and a speech by Federal Reserve Chair Janet Yellen on Friday.

Sector News

While many of the major sectors showed only modest moves on the day, oil service stocks saw considerable strength throughout the session. Reflecting the strength in the sector, the Philadelphia Oil Service Index surged up by 2.2 percent.

The gains by oil service stocks came amid a sharp increase by the price of crude oil, with crude for July delivery jumping $1.74 to $60.72 a barrel.

Railroad stocks also turned in a strong performance, driving the Dow Jones Railroads Index up by 1.4 percent. Kansas City Southern (KSU), Canadian Pacific (CP), and Union Pacific (UNP) posted notable gains.

Notable strength was also visible among natural gas stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Natural Gas Index. Telecom and retail stocks also saw some strength on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region once again closed mixed on Thursday. Australia's All Ordinaries Index advanced by 0.9 percent, while Japan's Nikkei 225 Index closed nearly flat and Hong Kong's Hang Seng Index slipped by 0.2 percent.

Meanwhile, the major European markets all moved modestly higher on the day. While the French CAC 40 Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index both inched up by 0.1 percent.

As mentioned above, treasuries moved notably higher on the heels of the economic data, adding to yesterday's modest gains. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.6 basis points to 2.185 percent.

Looking Ahead

Economic data is likely to remain in focus on Friday, with traders likely to keep a close eye on the Labor Department's report on consumer price inflation.

Remarks by Federal Reserve Chair Janet Yellen are also likely to attract attention, with the Fed chief due to deliver a speech on the economic outlook in Providence, Rhode Island.

On the earnings front, Hewlett-Packard (HPQ), Gap (GPS), Intuit (INTU), and Aeropostale (ARO) are among the companies due to release their quarterly results after the close of today's trading.