The broad indices rebounded with gains of over 1% after two straight days of declines, following a set of better-than-expected economic reports. There were also two major M&A deals announced, including an agreement by Safeway (SWY - Get Report) to sell its Canadian operations for $5.7 billion and Gannett's (GCI - Get Report) acquisition of Belo Corp. (BLC) for $1.5 billion.
The Department of Labor reported that initial unemployment claims for the week ended June 8 were down 12,000 to 334,000 from 346,000 the previous week. Economists surveyed by Thomson Reuters on average had expected last week's initial claims number to come in at 345,000.
The four-week moving average for first-time jobless claims was 345,250, declining 7,250 from the previous week's average of 352,500. Continuing claims during the week ending June 1 increased by 2,000 to 2.973 million, but came in lower than 2.975 million expected by economists.The Census Bureau said that U.S retail sales during may rise by 0.6%, which was the strongest reading on consumer activity since February. Sales had increased 1% in April. Economists, on average, were expecting an increase of 0.4% in May. The U.S. Bureau of Labor Statistics reported that prices for U.S. imports declined 0.6% in May after a 0.7% drop the prior month because of declining fuel and nonfuel prices. U.S. export prices fell 0.5% after a decline of 0.7% in April. The anti-inflationary evidence provided by the import price numbers is music to the ears of investors worried over eventual slowdown of securities purchases by the Federal Reserve. The central bank has been making monthly purchases of $85 billion in long-term securities since September, in an effort to hold long-term rates down. Investors have been anticipating a curtailment of this stimulus activity by the Fed, sending the market yield on 10-Year U.S. Treasury bonds up 55 basis points from the end of April through Wednesday's yield of 2.25%. The yield on the 10-year declined to 2.18% on Thursday. The Federal Open Market Committee will meet on June 18-19 and issue a statement on Federal Reserve monetary policy.