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Stocks Post Gains on Upbeat Economic Reports

NEW YORK (TheStreet) -- Major U.S. stock averages climbed Thursday on optimism over an upbeat set of China trade numbers and hopeful comments on the eurozone economy.

Support also came from comments by St. Louis Federal Reserve Bank President James Bullard that the U.S. economy may experience strong growth this year and the next, partly thanks to the central bank's policy easing.

The Dow Jones Industrial Average closed up 81 points, or 0.6%, to 13,471.

Breadth was positive, with winners outpacing losers 25 to five.

Bank of America (BAC), Hewlett-Packard (HPQ), Intel (INTC) and JPMorgan (JPM) were the top percentage gainers in the Dow.

The biggest blue-chip losers were DuPont (DD), Alcoa (AA) and Microsoft (MSFT).

The S&P 500 added 11 points, or 0.8%, to 1,472. The Nasdaq increased 16 points, or 0.5%, to 3,122.

"Despite volatile swings, the U.S. corporate sector has generated impressive gains in profits per domestic resident over the past 20 years," said Julia Coronado, an economist at BNP Paribas. "Much of this reflects how well U.S. companies have shifted their focus to and taken advantage of stronger growth prospects abroad. Alcoa's results [on Tuesday]suggest the outlook for 2013 is a little brighter."

Still, Coronado cautioned that since much of the expansion in capital investment and hiring is occurring abroad the implications for the U.S. economy would be more muted.

All sectors in the broader market, except capital goods, traded higher. The strongest sector gainers were conglomerates, consumer non-cyclicals, energy and financials.

Volumes totaled 4.04 billion shares on the New York Stock Exchange and 1.75 billion shares on the Nasdaq. Advancers were narrowly edging decliners by a 1.9-to-1 ratio on the Big Board and 1.4-to-1 on the Nasdaq.

The Labor Department reported Thursday that initial jobless claims for the week ended Jan. 5 rose by 4,000 to 371,000, from the prior week's downwardly revised figure of 367,000. Economists were expecting claims to come in at 365,000.

"More generally, the claims data can be volatile this time of year because of the difficulty of seasonal adjustment around the holidays," said Kevin Cummins, an economist at UBS. "It will be several more weeks before the claims data are free of influence from the holiday seasonal factors. Thus, we attach little weight to possible swings for the next couple of weeks."

Continuing claims for the week ended Dec. 29 were at 3.109 million, a decrease of 127,000 from the preceding week's downwardly revised level of 3.236 million. On average, expectations were for continuing claims of 3.23 million.

The Census Bureau reported that wholesale inventories rose 0.6% in November, after increasing by a downwardly revised 0.3% in October, versus the rise of 0.3% expected by economists. However, worries about declining demand were shrugged off in light of the fall in the inventory-to-sales ratio.

Overseas, the European Central Bank stood pat on record-low interest rates for the sixth straight month Thursday, as expected. The Bank of England also met expectations by keeping interest rates unchanged at record lows.

After the ECB meeting, the central bank's president Mario Draghi said he was expecting a gradual recovery in eurozone economic activity later this year as bond markets stabilize.

"In particular, our accommodative monetary policy stance, together with significantly improved financial market confidence and reduced fragmentation, should work its way through to the economy, and global demand should strengthen," Draghi said.

China, the world's second-largest economy, reported a strong rebound in exports in December, which reached a seven-month high. Imports in the period rose at a rate that was double what was anticipated.

Gold for February delivery surged Thursday by $22.50 to settle at $1,678 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil contracts closed up 72 cents at $93.82 a barrel.

The benchmark 10-year Treasury slid by 11/32 to raise the yield to 1.900%. The dollar was plummeting 1.05%, according to the U.S. dollar index.

In corporate news, Aeropostale (ARO) shares dropped 1% after the specialty retailer reduced its fourth-quarter earnings outlook after announcing lower-than-predicted sales and margins for the holiday season.

Tiffany (TIF) shares declined 4.5% after the luxury-goods retailer said its holiday sales growth was at the low end of the company's expectations and that it now expects full-year earnings also to be at the lower end of its November forecast of $3.20 to $3.40 a share.

Comparable-store sales for the two-month period ended Dec. 31 were unchanged from the prior year.

Herbalife (HLF) shares advanced 1.8% after Dan Loeb's Third Point Capital said on Wednesday it bought nearly 9 million shares in the company, a move that cuts against a short position in the embattled supplements seller by Bill Ackman of Pershing Square Capital Management.

The disclosure by Third Point came a day before the supplements seller with a multi-level marketing arrangement publicly responded to Ackman's short position, which was disclosed on Dec. 19.

Ruby Tuesday (RT) posted a fiscal second-quarter loss that was wider than analysts' expectations and said it plans to close up to 24 restaurant locations. Shares were down 5.8%.

BlackRock (BLK), the world's largest asset manager, agreed to buy Credit Suisse's (CS) exchange-traded fund business.

BlackRock shares rose 1.8%. Credit Suisse shares ended up 3%.

BlackRock said the purchase of the unit, which has $17.6 billion of client assets under management, is expected to close by the end of the second quarter. Terms of the deal weren't disclosed.

PriceSmart (PSMT) posted fiscal first-quarter sales and profit that topped analysts' estimates. Shares settled off 0.72%.

Nokia's (NOK) American depositary receipts increased 19% after the company announced stronger-than-anticipated fourth-quarter results and profitability at its mobile-phone business.

Ford (F) shares rose 2.7% as the automaker doubled its quarterly dividend to 10 cents a share.

-- Written by Andrea Tse and Joe Deaux in New York.



>To contact the writer of this article, click here: Andrea Tse.

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