Late Rally Lifts Dow Ahead of Jobs Data

NEW YORK ( TheStreet) -- A very late session rally helped stocks finish with solid gains Thursday, as market participants began to shift their gaze toward Friday's much anticipated August jobs report.

The major indices were helped by broadly positive retail sales figures, a pickup in a pending-home sales measure, and a modest drop in new jobless claims.

But ignoring the session's final moments, stocks moved sideways for the vast portion of the day, with traders sitting on their hands, hesitant to make any definitive moves ahead of Friday's big data point. The market's defiant crawl higher in the final hour came even as early estimates provided by Briefing.com were calling for nonfarm payrolls to shed another 120,000 jobs last month and the nation's unemployment rate to tick up to 9.6%.

The Dow Jones Industrial Average finished up by 51 points, or 0.5%, at 10,320. The S&P 500 added 10 points, or 0.9%, at 1090, while the Nasdaq traded 23 points higher, or 1.1%, at 2200.

After closing the books on their worst August since 2001, stocks kicked off September in fine style Wednesday. The Dow finished 255 points higher on upbeat economic data out of China and Australia, coupled with a surprisingly strong manufacturing report in the U.S. Thursday only extended those gains, helped by a select set of improving economic data points.

While Wall Street is preparing for the jobs reading, Thursday offered investors another glimpse at weekly initial claims data, which have tracked higher in recent weeks. The Labor Department said new claims for unemployment benefits edged just lower by 6,000 to a seasonally adjusted 472,000 for the week ended Aug. 28. They were expected to rise by 2,000 from the prior week's pre-revised total at 473,000, according to Briefing.com. The number of those continuing on jobless benefit rolls also came in a hair lower to 4.456 million from 4.479 million.

At the same time, the department also unveiled a revised look at worker productivity in the second quarter. Productivity declined at double the rate as initially reported, dropping at a 1.8% annual rate in the revised assessment. Wall Street was expecting a 1.7% fall. Unit labor costs also jumped 1.1%, as expected.

A better-than-expected manufacturing readout helped fuel the market rally Wednesday. Market observers got another look at the sector Thursday as the Commerce Department said July factory orders saw a modest 0.1% gain. The showing follows a better revised 0.6% drop in June, though orders were projected to edge up 0.3% in July.

But an assessment on pending-home sales in July came in stronger than hoped. Cobbled together by the National Association of Realtors , the group's index tracking the number of contracts for previously owned homes went higher by 5.2% in July. The measure was forecast to hold flat for the month, according to Briefing.com, though it still slumped 19.1% from last year.

In a press statement, Lawrence Yun, chief economist for the NAR, also warned that "home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery."

Elsewhere, Federal Reserve Chairman Ben Bernanke spoke Thursday before the Financial Crisis Inquiry Commission, which is charged with looking into the events leading to the financial meltdown.

Various retailers released comparable same-store sales data Thursday morning, with most showing off better-than-expected results. Costco ( COST) said comparable-store sales rose 7% in August, while sales for teen retailer Hot Topic ( HOTT) and Buckle ( BKE) dropped by 3.7% and 3.5%, respectively, during the period.

Target ( TGT) sales were up 1%, while Macy's ( M) advanced 4.3%.

Shares for Merck ( MRK), IBM ( IBM) and American Express ( AXP) weighed the most heavily on the Dow, while Alcoa ( AA), Home Depot ( HD) and Boeing ( BA) put in the average's best gains.

Further deal developments also continued bubbling up Thursday. Burger King ( BKC) shares soared over 25% to finish at $23.58 after news swirled that the fast food chain was to be bought out by 3G Capital for $4 billion, or $24 a share. Confirmation of the deal price was first circulated Thursday by CNBC, but talk of the transaction began making the rounds Wednesday on reports from the Wall Street Journal and the New York Times.

Meanwhile, the bidding war for data storage firm 3Par ( PAR) appeared to reach a conclusion Thursday after Hewlett-Packard ( HPQ) sweetened its bid for 3PAR by $3 to $33 a share. The heightened price, which was first reported by The Wall Street Journal and later confirmed in a company statement, forced Dell ( DELL) to drop out of the auction, though the PC maker will get a $72 million termination fee as consolation. H-P shares improved 1.2% to $39.67, while 3PAR added another 2.4% to $32.86. Dell shares improved 2% to close at $12.36.

According to a report, General Motors is thought to be pricing its much-anticipated initial public offering on Nov. 17. According to Reuters, the auto manufacturer is planning to kick off its road show after the November mid-term elections.

An offshore oil platform in the Gulf of Mexico, this one owned by Mariner Energy ( ME), caught fire Thursday morning. A Mariner spokesperson told CNBC in the morning that all in the crew of 13 were accounted for and there were no indications of an oil spill. But a coast guard officer said an oil sheen a mile long could be seen near the platform, according to a later report from The Associated Press. Shares shed 2.6% to $22.74.

AOL ( AOL) inked a renewed search deal with Google ( GOOG), with Google exchanging search services for revenue sharing on AOL's content network. Shares of AOL closed 18 cents higher at $23.08, while Google went ahead by 0.6% at $463.18.

Shares of Del Monte ( DLM) lost 2.5% to finish at $12.83 after it trimmed its full-year sales outlook. Sales are now expected to rise 1% to 3% over last year, after previous estimates called for a 2% to 4% jump.

Elsewhere, natural gas inventory levels rose higher last week, the Energy Information Administration said Thursday, adding another 54 billion cubic feet to underground storage in the lower 48 states. The increase landed at the lower end of an expected range that called for an injection between 53 to 57 billion cubic feet, according to analysts polled by Platts.

The October natural gas contract, which was relatively unchanged ahead of the release, settled a penny lower at $3.75 per million British thermal units. Also in commodity markets, crude oil for October delivery was added $1.11 to finish at $75.02 a barrel, and the December gold contract traded higher by $5.30 to finish at $1,253.40 an ounce.

The benchmark 10-year Treasury note was down 13/32, boosting the yield to 2.627%.

Meanwhile, the dollar was trading fractionally lower against a basket of currencies, with the dollar index losing 0.03%.

Overseas, the European Central Bank said it was keeping its target lending rate unchanged at 1%, which marks the 16th straight months that rates have been held steady at the record low. Asian stocks moved ahead Thursday thanks to the improving U.S. manufacturing picture, though European averages were trading lower. Hong Kong's Hang Seng rose 1.2% higher, while Japan's Nikkei gained 1.5%. The FTSE in London went ahead by 0.1% while the DAX in Frankfurt held flat.

--Written by Sung Moss in New York.

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