The consumer discretionary group lead the rally
U.S. stocks finished with strong gains on Thursday, 06 February 2014 as investors welcomed a larger-than-expected drop in weekly jobless claims and upbeat earnings from companies including Walt Disney Co. Stocks began on an upbeat note and climbed through the first 90 minutes of action. Much of the advance was paced by groups that faced aggressive selling during the recent pullback. Thursday's jobless claims data set an optimistic tone for Friday's non-farm payrolls report due a day later.
The Dow Jones Industrial Average closed near session highs, adding 188.30 points, or 1.2%, to 15,628.53. The Nasdaq Composite ended the day 45.57 points, or 1.1%, higher at 4,057.12. The S&P 500 index closed up 21.79 points, or 1.2%, at 1,773.43. The consumer discretionary group ended in the lead.
Earnings results released after the market close on Wednesday and before the opening bell Thursday were mixed. Disney shares jumped 5.3%, leading gains on the Dow average, after earnings topped estimates, helped by the popularity of the Frozen animated movie. Twitter I plunged 24% after earnings disappointed investors late Wednesday.
A recent spate of disappointing U.S. economic data has put even more importance on Friday morning's monthly U.S. jobs report for January. A weaker-than-expected jobs report on Friday would call into question how much more the Fed would be able reduce its monthly bond-buying program, also called quantitative easing.
Also Read
The important data point for Thursday was the monthly monetary policy meeting of the European Central Bank, including a press conference by ECB president Mario Draghi. The ECB left its key interest rates unchanged at the meeting.
Today's economic data at Wall Street featured three reports. The initial claims level settled back into the 330,000 range this week as the initial claims level fell to 331,000 from an upwardly revised 351,000 (from 348,000). The consensus expected the initial claims level to fall to 335,000.
Fourth quarter nonfarm labor productivity increased 3.2% while the consensus expected an increase of 2.4%. That was down from an upwardly revised 3.6% increase (from 3.0%) in the third quarter. Profit growth outperformed labor gains in the fourth quarter. Compensation per hour increased only 1.5%, down from a 1.6% increase in the third quarter. With compensation increasing at a slower rate than productivity, unit labor costs fell 1.6%. That was the third quarterly decline of 2013.
The U.S. trade deficit for December widened to $38.7 billion from an upwardly revised $34.6 billion (from $34.3 billion). The consensus expected the trade deficit to increase to $36.0 billion. The Bureau of Economic Analysis assumed the trade deficit in December increased to around $37.0 billion in the advance estimate for fourth quarter GDP. The slightly higher than expected deficit will likely contribute to lower GDP growth in the second estimate.
Bullion prices ended moderately higher on Thursday, 06 February 2014. Gold futures managed to score a modest gain by the close on Thursday, after spending the bulk of the session trading a bit lower, with investors anxiously awaiting January U.S. jobs data, scheduled to be released early Friday. A weaker U.S. dollar index was a bullish daily input for the gold market on Thursday. However, a rally in U.S. equities kept a cap on any gains as the market digested comments from the European Central Bank's Mario Draghi and a fall in U.S. jobless claims.
Gold for April delivery tacked on 30 cents to settle at $1,257.20 an ounce on the Comex division of the New York Mercantile Exchange. March silver added 12 cents, or 0.6%, to $19.93 an ounce, extending its 2% gain from a day earlier.
Crude oil futures closed higher on Thursday, 06 February 2014 as a drop in U.S. jobless claims and strength in U.S. equities supported an upbeat outlook for energy demand. March crude oil picked up 46 cents, or 0.5%, to settle at $97.84 a barrel on the New York Mercantile Exchange. On Wednesday, the contract rose 0.2%.
Treasuries ended near their lows with the 10-yr yield up three basis points at 2.71%.
Participation was a bit above average as 730 million shares changed hands at the New York Stock Exchange.
Tomorrow's data will focus on jobs with the nonfarm payrolls report for January set to be released at 8:30 ET. Hourly earnings and average workweek will also be announced at 8:30 ET while the December consumer credit report will cross the wires at 15:00 ET.
Powered by Capital Market - Live News
