Stocks Finish With Modest Gains - TheStreet

Stocks Finish With Modest Gains

Stocks finished Thursday's session moderately higher as investors mulled private sector job gains and a decline in initial weekly jobless claims a day ahead of the government's May jobs report.
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NEW YORK (

TheStreet

) -- Stocks finished Thursday's session with modest gains as investors reviewed private sector job growth and continued declines in initial weekly jobless claims ahead of Friday's May nonfarm payrolls report.

The

Dow Jones Industrial Average

gained 6 points, or 0.06%, to finish at 10,255. The

S&P 500

added 5 points, or 0.4%, to close at 1103, and the

Nasdaq

finished higher by 22 points, or 1%, at 2,303.

On Thursday,

global markets showed strong gains. Hong Kong's Hang Seng rose 1.6%, and Japan's Nikkei soared 3.2%. The FTSE in London gained 1.2% and the DAX in Frankfurt was higher by 1.2%.

"The rate of improvement in most indicators slowed through April and May as the recovery lost some momentum," said PNC chief economist Stuart Hoffman, adding that economic data released in the past week have been consistent with "half-speed" gross domestic product recovery expectations for the rest of the year.

"We expect second-quarter GDP to reflect the gradually fading tailwind of government stimulus, with real GDP growth in the range of 2.5% to 3%, annualized."

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The Economy

Automatic Data Processing's employment report showed that the private sector gained 55,000 jobs in May, which was slighly below economists' expectations for 60,000 jobs.

The Labor Department said initial weekly jobless claims shed 10,000 to 453,000 in the week ended May 29, which was better than the 455,000 claims that economists had been expecting.

The Labor Department also reported first-quarter productivity of 2.8%, which was lower than its preliminary reading of 3.6%. Labor costs, meanwhile, fell 1.3%, which was a milder decline than 1.6% previously. Economists had been expecting productivity of 3.3% and a unit labor cost decline of 1.6%.

PNC's Hoffman, who expects milder productivity growth in keeping with the recovery phase of the GDP cycle, warned: "Moderate GDP growth in combination with moderate productivity growth puts a limit on job growth and will keep the pace of improvement to the unemployment rate stubbornly slow."

The Institute for Supply Management's index measuring the economic activity in the services sector held flat at 55.4 in May after registering the same tally in April. Marketwatchers had projected an index reading of 55.6. A reading above 50 indicates growth.

The Department of Commerce also said factory orders rose 1.2% in April, though that was beneath expectations calling for a 1.7% jump and behind the upwardly revised 1.7% increase in March.

Retailers also notched a mixed month of sales in May, as 16 of the 26 companies tracked by TheStreet beat expectations, while the other 10 fell short. The

Retail HOLDRs ETF

(RTH) - Get Report

was slipped 0.2%, to $97.70.

Natural gas storage levels rose by a lower-than-expected 88 billion cubic feet in the week ended May 28, according to the Energy Information Administration. Analysts polled by Platts had been anticipating a build in the range of 90 billion to 94 billion cubic feet.

The EIA also reported on oil inventories, which fell by 1.9 million barrels, exceeding the 1-million barrel drop that analysts polled by Platts had been expecting. The EIA's figure is also larger than the decline of 1.42 million barrels reported by the American Petroleum Institute late Wednesday. According to EIA data, gasoline stockpiles lost 2.6 million barrels, while distillates gained 500,000 barrels. Analysts had been projecting a 750,000-barrel increase in gasoline supplies and an additional 950,000 distillates in the week ended May 28.

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Company News

Shares across the utilities, technology and energy sectors showed the most strength. On the Dow,

Cisco Systems

(CSCO) - Get Report

,

Microsoft

(MSFT) - Get Report

, and

Exxon Mobil

(XOM) - Get Report

put in the best performance of the session, while

Home Depot

(HD) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

Du Pont

(DD) - Get Report

were the biggest drags.

Warehouse retailer

Costco Wholesale

(COST) - Get Report

reported a 9% increase in May same-store sales. Domestically, sales were 7% higher, and internationally, sales rose 17% in May. The stock lost 1.7%

The UK Financial Services Authority fined

JPMorgan Chase

(JPM) - Get Report

33.3 million pounds ($49 million) for failing to protect clients' funds.

The UK's

Prudential

(PUK) - Get Report

announced the termination of its agreement to buy

AIG's

(AIG) - Get Report

Asian life insurance unit. Shares shed 1.1%.

Media company

Nielsen Holdings

is apparently looking to file an initial public offering very soon, according to

The Wall Street Journal

.

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Commodities and the Dollar

Following the EIA reports,

crude oil for July delivery gained $1.75, or 2.4%, to settle at $74.61 a barrel, and July natural gas futures added 27 cents to settle at $4.69 per million British thermal units.

Elsewhere in commodity markets, the August

gold contract shed $12.60, to settle at $1,210 an ounce.

The dollar was trading higher against a basket of currencies, with the

dollar index up by 0.6%.

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>>The Economy

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Treasuries

The benchmark 10-year Treasury fell 9/32, increasing the yield to 3.381%.

The two-year note was slightly weaker, raising the yield to 0.821%. The 30-year bond declined 25/32, strengthening the yield to 4.291%.

--Written by Melinda Peer and Sung Moss in New York

.

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