Stocks Show Substantial Move Back To The Upside - U.S. Commentary

(RTTNews) - Following the pullback seen over the two previous sessions, stocks showed a substantial move back to the upside during trading on Thursday. With the gains, the Dow and the S&P 500 reached their best closing levels in nearly two months.

The major averages saw further upside going into close, ending the session at their best levels of the day. The Dow surged up 217.00 points or 1.3 percent to 17,141.75, the Nasdaq soared 87.25 points or 1.8 percent to 4,870.10 and the S&P 500 jumped 29.62 points or 1.5 percent to 2,023.86.

The rally on Wall Street came following the release of a slew of U.S. economic data, including a Labor Department report showing an unexpected drop in initial jobless claims.

The report said initial jobless claims fell to 255,000 in the week ended October 10th, matching their lowest level in over forty years. Economists had expected jobless claims to climb to 270,000.

A separate report from the Labor Department said consumer prices fell in line with estimates in the month of September, although the report also showed that core prices rose slightly more than expected.

The Labor Department said its consumer price index slipped by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to dip by 0.2 percent.

Excluding food and energy prices, the core consumer price index rose 0.2 percent in September following a 0.1 percent uptick in August. Core prices had been expected to inch up by another 0.1 percent.

Compared to the same month a year ago, the headline consumer price index was essentially unchanged in September, while the core index was up by 1.9 percent.

Steve Murphy, U.S. Economist at Capital Economics, said, "Overall, there is nothing in this report that would persuade Fed officials to hike interest rates before the end of this year."

"But it will be much harder to leave rates at near-zero next year when possibly both headline and core CPI inflation will be above 2%," he added.

Meanwhile, the New York and Philadelphia Federal Reserves released separate reports showing continued contractions in regional manufacturing activity in October.

Sector News

Biotechnology stocks turned in a particularly strong performance on the day, driving the NYSE Arca Biotechnology Index up by 4.3 percent. With the gain, the index offset the losses posted in the three previous sessions.

Within the biotech sector, Nektar Therapeutics (NKTR), Alnylam (ALNY), and Agios (AGIO) posted standout gains on the day.

Considerable strength was also visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the Dow Jones Banks Index jumping by 3.3 percent and 2.8 percent, respectively.

Financial giant Citigroup (C) helped to lead the sector higher, surging up by 4.4 percent after reporting better than expected third quarter earnings.

Airline, pharmaceutical, and natural gas stocks also saw significant strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region rebounded following a two-day slide. Japan's Nikkei 225 Index advanced by 1.2 percent, while China's Shanghai Composite Index surged up by 2.3 percent.

The major European markets also showed strong moves back to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1.1 percent, the French CAC 40 Index and the German DAX Index shot up by 1.4 percent and 1.5 percent, respectively.

In the bond market, treasuries gave back ground after ending the previous session notably higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 2.023 percent.

Looking Ahead

Trading on Friday may be impacted by the Fed's report on industrial production in September as well as the University of Michigan's preliminary report on consumer sentiment in October.

On the earnings front, General Electric (GE) and Honeywell (HON) are among the companies due to report their quarterly results before the start of trading on Friday.