Dow Rebounds as Economic Data Paint Bright Outlook
NEW YORK (TheStreet) -- U.S. stocks rebounded Thursday, reversing earlier losses after a spate of housing and manufacturing data underscored the ongoing economic recovery. Markets had been lower earlier in the session, continuing their cautious tone after Federal Reserve officials indicated rates may rise faster than anticipated.
- The Dow Jones Industrial Average closed up 0.67% to 16,331.05, while the S&P 500 added 0.6% to 1,872.01. The Nasdaq gained 0.27% to 4,319.29.
- Weekly initial jobless claims for the week ended March 15 rose by 5,000 to 320,000 vs. the average economist's estimate of 325,000. The four-week moving average representing longer-term trends fell 3,500 to 327,000.
- A spate of domestic economic data releases on Thursday were broadly positive: February existing home sales fell 0.4% to a seasonally adjusted annual rate of 4.6 million, matching expectations amid poor weather. The Philadelphia Fed Index for March expanded at a faster pace, with the general business conditions index moving to positive 9 from negative 6.3 in February. The index of leading indicators rose more than forecast in February, with the Conference Board's outlook for the next three to six months up 0.5%. That's the biggest gain since November and it beat expectations for a 0.2% increase.
- U.S. stocks closed lower but bounced off session lows Wednesday after Federal Reserve Chairwoman Janet Yellen explained the central bank's revised forward guidance, including a plan to drop the unemployment threshold. The Dow and S&P 500 tanked during Yellen's press conference that followed the Fed's policy meeting when Yellen said that the period between the end of so-called tapering and the beginning of hiking interest rates could be just six months.
- Yellen's comments also rattled the global markets, which were all heading lower at the suggestion that the first hike in interest rates could take place in the summer of 2015. The FTSE 100 in London was down 0.68%, the DAX in Germany was falling 0.40%, the Hong Kong Hang Seng closed down 1.79% and the Nikkei 225 in Japan fell 1.65%.
- In stock news, Verizon (V) was a top laggard in the Dow, down 0.87%, while Masco Corp. (OXY) shed 3.6% as a top loser in the S&P.
- Guess? (GES) lost 3.4% as its full-year earnings forecast disappointed analysts.
- Microsoft (MSFT) was up more than 2.5% after analyst reports suggested new software for its iPad could deliver $1.2 billion a year in earnings.
- Sony (SNE) was up 2.7% following reports it is looking to reduce ties with about three-quarters of its suppliers to help expedite bringing products to the market.
- Despite the less-dovish-than-expected tone Yellen seemed to communicate on Wednesday, S&P Capital IQ chief equity strategist, Sam Stovall, noted that from a technical perspective the S&P 500 is maintaining the uptrend that has been in force for the last few years and he identifies 1,918 and 2,030 as upside targets using the 161.8% and 261.8% Fibonacci extension projections of the last decline. Stovall also said in his note that the S&P 500 remains well above its 30-week exponential moving average, which he said has been a good barometer of significant dips over the past year. There remains robust support in the 1,627 to 1,707 area and only a breach of this zone along with a piercing of the lower trend channel would alter Stovall's bullish bias.
-- Written by Jane Searle, Andrea Tse and Joe Deaux in New York
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV