Stocks Finish Higher on Strong U.S. Data
NEW YORK (TheStreet) -- The major U.S. indices finished about 1% higher Thursday on a set of strong domestic economic headlines.
The Dow Jones Industrial Average gained 123.1 points, or 1%, at 12,904, bouncing back from an almost 100-point drop the previous day, its worst session of the year. The S&P 500 rose 14.8 points, or 1.1%, at 1358. The Nasdaq added 44 points, or 1.5%, at 2960. All major sectors had been trading in the green, led by basic materials, consumer cyclical stocks and technology.
According to S&P Capital IQ, the S&P 500 was less than 1% away from eclipsing its 1363 recovery high as of Feb. 14, and could succeed in the coming weeks. However, says, Sam Stovall, chief equity strategist, S&P Capital IQ, "just as it takes several energetic attempts to open a rusty door," the index will need to backtrack a few paces before achieving the necessary momentum.
A spate of better-than-expected domestic data was lifting sentiment. The number of Americans seeking first-time unemployment benefits fell 13,000 to 348,000 in the week ended Feb. 11 from a revised 361,000 the previous week, according to a Labor Department report. Economists expected claims to rise to 365,000 from an originally reported 358,000."That today's [jobless] number was not only better than expected but much better than expected can only be received warmly, providing further evidence that at least on the firing side of things, the labor market is improving considerably," Dan Greenhaus, chief global strategist, BITG, said in a note. "If this trend continues, one would have to believe, given previous relationships, that the monthly employment report will begin printing 200,000 plus job additions on a regular basis." Housing starts rose 1.5% to a seasonally adjusted 699,000 in January from a revised 689,000 in December, according to a Census Bureau report. Economists had expected starts to climb 2% to 670,000. Building permits rose 0.7% to 676,000 for the month. Single-family building permits rose 0.9% to 445,000 from a revised 441,000 in December. "While we still do not expect housing to become an engine of growth for the U.S. economy anytime soon, there is every reason to believe that it has finally hit bottom," says Millan Mulrain, senior U.S. strategist at TD Securities. The January producer price index rose 0.1%, after falling 0.1% in December. Core producer prices, excluding food and energy, rose 0.4% in January, the largest increase since July, following a rise of 0.3% in December. The Federal Reserve Bank of Philadelphia said manufacturing activity in the region picked up in February. The bank's general activity index rose to a reading of 10.2 from 7.3 in January. As market action heated up, James "Rev Shark" DePorre, founder and CEO of Shark Asset Management, said "even though the market is holding up well, the problem we encounter is that the dip-buyers are backing off and the sellers are showing more resolve, hitting the market harder when it spikes." "Another important characteristic of the market to watch is its leadership," says Shark. "Apple (AAPL) has been leading the recent charge higher, and its sharp reversal Wednesday helped to create a major shift in the mood. There is good reason for that. According to SentimenTrader.com, when AAPL has reversed 1% after hitting new highs, the S&P 500 has declined an average of 5.2% at some point in the next month. Apple is truly a market leader." Apple shares closed above $500, after slipping below this milestone mark earlier in the day. Stocks closed lower Wednesday as reports that Greece's creditors were delaying the country's bailout eclipsed news that China may provide financial support to the eurozone. As a March 20 deadline for repaying its debt quickly approaches, Greece must convince its German-led European partners that it will carry out conditions necessary for receiving its second bailout package of €130 billion. The country urgently needs this and a €100-billion write-down on privately held sovereign debt to prevent a massive default that could rock the global financial markets. European partners continue to express skepticism about Greece's ability to fulfill deal requirements as it had backpedaled on promises in the past. While Athens hopes that it can eradicate doubts by the next meeting of eurozone finance ministers on Monday, there have been suggestions of finding ways to hold off on the complete delivery of the bailout until after Greece's early elections in April, while at the same time avoiding a chaotic default. Greek finance minister Evangelos Venizelos meanwhile indicated that a €325-million gap in Greece's budget this year can be plugged. Meanwhile, reports say that the European Central Bank is planning to swap Greek bonds for new one on the same terms so they wouldn't have to take any forced losses. It's estimated that the ECB owns about € 50 billion euros of Greek bonds. The euro had earlier fallen to a three-week low against the dollar as talks dragged on, but has since rebounded as markets got a lift from U.S. data releases. As the eurozone continues to fight its debt crisis, Moody's warns that it may cut the credit ratings of 17 global and 114 European financial institutions. The credit ratings of Morgan Stanley (MS), UBS (UBS) and Credit Suisse (CS) could be cut three notches by Moody's because of the risks associated with the eurozone debt crisis. Germany's DAX closed down 0.09% while London's FTSE settled lower by 0.12%. Japan's Nikkei Average settled down 0.24% and Hong Kong's Hang Seng closed lower by 0.41%.
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