Stocks Finish Higher on Jobs Data, China Stimulus Hopes


NEW YORK (TheStreet) -- The major U.S. stock averages surged Thursday, getting a lift from an encouraging snapshot of labor market conditions and expectations for stimulus from China.

Investors were also provided the outline of Spain's stringent 2013 budget plan, which will focus heavily on spending reductions and is viewed as a precursor to a formal request by the country for international aid.

These factors were offsetting a downward revision in second-quarter gross domestic product and a sharp drop in durable goods orders in August.

The Dow Jones Industrial Average rose more than 72 points, or 0.54%, to close at 13,486. The blue-chip index, which had fallen in the past four sessions, began the day up a little less than 10% so far this year.

Breadth within the Dow was positive with winners ahead of losers, 23 to 6 and Procter & Gamble ( PG) finishing flat. The biggest gainers were Bank of America ( BAC), General Electric ( GE), and Intel ( INTC).

Hewlett-Packard ( HPQ) shares were up incrementally, recovering from early losses after Jefferies slashed its view of the PC giant to underperform from hold and cut its price target to $14 from $17.

Dow laggards included Wal-Mart ( WMT), United Technologies ( UTX), and AT&T ( T).

The S&P 500 traded up nearly 14 points, or 0.96%, to settle at 1447, while the Nasdaq gained 43 points, or 1.39%, to finish at 3137.

The broad market was entirely in the green, led by strength in the basic materials, consumer cyclical, technology, energy and financial sectors. Advancers outpaced decliners by a ratio of 3-to-1 on the New York Stock Exchange and 2.7-to-1 on the Nasdaq.

Volume totaled 3.13 billion on the Big Board and 1.69 billion on the Nasdaq.

The FTSE 100 in London closed up 0.20% and the DAX in Germany closed up 0.19% Thursday. Spanish borrowing costs cooled as the country's government announced a 2013 budget plan that would reduce ministries' budgets by 8.9% and said that it was certain its 6.3% deficit target for 2012 would be achieved.

Also, Greek coalition partners have agreed on most of the budget cuts needed to obtain additional help.

Meantime, speculation that the China's securities regulator plans to reveal market-boosting plans sent Asian markets higher. Hong Kong's Hang Seng Index finished up 1.14% while the Nikkei Average in Japan closed up 0.48%.

The market mood also strengthened on reports that the Chinese central bank has injected a net 365 billion yuan ($58 billion), a record amount, into the financial system ahead of a week-long public holiday next week in order to prevent a liquidity crunch.

"Chinese stocks rose on growing hopes of further stimulus measures aimed at propping up the markets while commodity prices responded by rising too," said Andrew Wilkinson, chief economic strategist at Miller Tabak, as he noted the brighter start to trading. "While none of Spain's pain has disappeared overnight, patterns in bond and stock markets seem to be pointing to less concern than earlier. Peripheral yields are lower and stocks are up."

November crude oil futures finished up $1.87 at $91.85 a barrel, while December gold futures surged $26.90 to settle at $1,780.50 an ounce.

The benchmark 10-year Treasury fell 13/32, lifting the yield to 1.657%. The greenback dropped 0.32%, according to the dollar index.

On the U.S. data front, the latest employment report offered some encouragement in an otherwise bleak day on domestic releases.

The Labor Department reported Thursday that initial jobless claims fell 26,000 in the week ended Sept. 22 to 359,000 from an upwardly revised figure of 385,000 in the prior week. The four-week moving average was 374,000, a decrease of 4,500 from the previous week's 378,500. Economists were expected initial jobless claims of 378,000.

Continuing claims during the week ended Sept. 15 were 3.271 million, a decrease of 4,000 from the preceding week's revised level of 3.275 million.

"The drop in initial jobless claims in late September is the second piece of better-than-expected labor-market news this week following the improvement in consumers' perceptions of the availability of jobs," noted John Ryding and Conrad DeQuadros, founders of economic consulting firm RDQ Economics.

"We should not read too much into any one initial claims reading, especially when claims had been boosted by Hurricane Isaac earlier in the month," he continued. "The four-week average puts claims at 374,000, the exact average for claims over the first eight months of the year (payroll growth averaged 139,000 per month over this period)."

The Census Bureau said Thursday that durable goods orders fell 13.2% in August after three consecutive monthly increases, and was the largest decrease since January 2009. Excluding transportation, orders fell 1.6%.

Economists predicted durable goods would decline 5%; excluding the transportation element, expectations were for a rise of 0.3%.

The Bureau of Economic Analysis said its third estimate on second-quarter gross domestic product came in up 1.3%, down from the prior estimate of 1.7%. Expectations were for an increase of 1.7%.

The National Association of Realtors said that its Pending Home Sales Index declined 2.6% to 99.2 in August from an upwardly revised 101.9 in July. Economists had expected no month-on-month change to occur.

"Overall, a disappointingly soft report that challenges some of the recent strength in the housing market data," commented Ian Lyngen, strategist at CRT.

In corporate news, shares of Research In Motion ( RIMM) rose 2% in Thursday's regular session ahead of its fiscal second-quarter report. After the close, the stock was up more than 10% after the BlackBerry maker posted a narrower than anticipated loss.

Goodyear Tire & Rubber ( GT) shares jumped 3.9% after Goldman Sachs upgraded the stock to buy.

Thor Industries ( THO) shares gained 5.8% after the manufacturer and supplier of recreation vehicles and small and mid-size buses posted stronger-than-anticipated fourth-quarter results as the company's recreational vehicle business booked double-digit sales increases.

Sealy ( ZZ) shares popped 2.3% after Tempur-Pedic International ( TPX ) said it will buy its mattress maker competitor for roughly $242 million and assume around $750 million in debt.

Tempur-Pedic shares surged 14.4%.

Discover Financial Services ( DFS) reported third-quarter earnings of $1.21 a share, beating estimates of $1.03 a share, as demand for its credit cards rose in the United States. Shares rose 7.3%.

McCormick ( MKC) shares were off 1.8% after the spice company disappointed on third-quarter revenue.

Dollar General ( DG) shares fell 1.6% after the discount retailer announced a 30 million-share secondary stock offering.


--Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

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