Stocks Jump for Second Straight Session
NEW YORK (
) -- The
Dow Jones Industrial Average
finished with a triple-digit gain for the second day in a row on Thursday, as better-than-expected chain-store sales and a jump in pending home sales bolstered confidence in the U.S. economic recovery.
Liquidity actions by the European Central Bank also helped to abate concerns over the eurozone debt crisis.
The Dow gained 107 points, or 0.9%, to close at 11,362. The
S&P 500
tacked on 15 points, or 1.3%, to settle at 1221, while the
Nasdaq Composite
rose 29 points, or 1.2%, to 2579.
Conglomerates, capital goods and basic materials were among the strongest sectors in the broad market. Within the Dow,
Home Depot
(HD) - Get Report
,
Alcoa
(AA) - Get Report
,
Bank of America
(BAC) - Get Report
and
JPMorgan Chase
(JPM) - Get Report
posted the best percentage gains.
Financials were also a bright spot after Goldman Sachs lifted the sector to "overweight" on a better economic outlook.
"Stronger economic growth, higher equity prices, and a more supportive interest-rate environment are positive for many subsectors of financials," the report said. The
SPDR Select Sector Financials ETF
(XLF) - Get Report
gained 2.5% to $15.12.
Kraft Foods
(KFT)
,
Cisco Systems
(CSCO) - Get Report
and
Pfizer
(PFE) - Get Report
were the only blue chips to finish in negative territory.
Homebuilder and banking stocks led the S&P 500 higher. Pending home sales rose 10.4% in October after falling 1.8% in September. Economists had expected pending home sales to remain flat, according to Briefing.com.
Toll Brothers
(TOL) - Get Report
surged 2.2% to $18.87
after it beat analysts' expectations..
Lennar
(LEN) - Get Report
,
Pulte Holmes
(PHM) - Get Report
and
D.R. Horton
(DHI) - Get Report
jumped 7%, 3.2% and 3.7%, respectively.
"The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011," said Lawrence Yun, National Association of Realtors chief economist, who added excellent housing affordability conditions are drawing homebuyers.
"Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability," he said. "Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80% and 90% of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed."
The ECB announced Thursday it was keeping a
at a record low 1% and said it would extend long-term liquidity tenders that had been scheduled to expire in early 2011. The governing council also decided to offer three-month refinancing options.
Speaking at a press conference Thursday following the ECB meeting in Frankfurt, ECB President Jean-Claude Trichet said, "Overall, the current monetary policy stance remains accommodative. The stance, the provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non-standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature."
Markets initially appeared disappointed that the ECB didn't step up purchases of government bonds, as had been expected. U.S. futures came off earlier highs during Trichet's press conference, and the
euro lost ground against the dollar. Sentiment turned around, however, as the U.S. and European markets showed strong gains and the euro rose to $1.3212 from $1.3137.
The FTSE in London surged to close 2.2% higher, while the DAX in Frankfurt gained 1.3%. In Asia, Hong Kong's Hang Seng added 0.9%, and Japan's Nikkei jumped 1.8%.
The Labor Department said
initial jobless claims rose to 436,000 in the week ended Nov.27, from 410,000 claims, previously. The level was higher than the 422,000 initial claims that economists had been expecting, according to Briefing.com.
|
The report comes ahead of the Labor Department's employment report on Friday. Private payrolls are expected to rise by 140,000 according to
Briefing.com
.
November same-store sales reports, which include results from the "Black Friday" weekend, largely came in ahead of estimates. Shares of
Abercrombie and & Fitch
(ANF) - Get Report
jumped 11.1% to $56.02 as the retailer said same-store sales rose 10.5% to $55.74, outpacing the increase of 6.8% that analysts expected.
Gap
(GPS) - Get Report
,
Macy's
(M) - Get Report
and
Target
(TGT) - Get Report
also all issued better-than-expected same-store sales gains in November. After a strong run up to the holiday season, Gap's stock was up 0.5% to $21.67 and shares of Macy's slipped 1.1% to $25.54. Target's stock was up by 2.8% to $59.65.
Warehouse retailer
Costco
(COST) - Get Report
said November same-store sales rose 9%, which was better than the increase of 6.2% that analysts had anticipated, while sales gains at
BJ's Wholesale Club
(BJ) - Get Report
were just shy of expectations for a 3.9% uptick. Costco's stock ticked higher by1% to $69.01 and BJ's stock finished ahead by 0.7% at $47.54.
Shares of
were down by 0.7% to $65.20 on news that it agreed to acquire 66% of
OAO Wimm-Bill-Dann
(WBD)
, a Russian dairy and fruit-juice company, for $3.8 billion. Wimm-Bill-Dann shares soared 28% to close at $31.34.
In commodity markets, the January crude oil contract gained $1.25, or 1.4%, to settle at $88 a barrel. The most actively traded February gold contract added $1.27, or 0.09%, to settle at $1,389.30 an ounce.
The dollar traded lower against a basket of currencies with the dollar index down by 0.7%, and the benchmark 10-year Treasury note weakened 9/32, lifting the yield to 2.998%.
.
--Written by Melinda Peer and Shanthi Bharatwaj in New York
.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.