Eight of ten sectors post gains led by telecommunications and consumer discretionary sectors
P> U.S. stocks climbed on Thursday, 29 August 2013 for a second day, denting weekly losses, as better-than-expected economic reports trumped the belief that the Federal Reserve will scale back bond purchases next month. Following the report, equity futures and Treasuries fell to their lows while the Dollar Index jumped to its high in a reaction consistent with increased tapering expectations. As the session dragged on, stocks displayed intraday strength, but slipped into the close while Treasuries erased their losses. The out performance of technology combined with strength among biotechnology companies helped the Nasdaq finish well-ahead of the broader market.The Dow Jones Industrial Average ended at 14,840.95, up 16.44 points, or 0.1%. It had initially dropped 32 points and had risen nearly 92 points. The Nasdaq Composite gained 26.95 points, or 0.8%, to 3,620.30. The S&P 500 index added 3.21 points, or 0.2%, to 1,638.17.
Eight of ten sectors posted gains. Telecommunications and consumer discretionary were the best performing and energy and utilities were the sole laggards among the ten economic sectors.
Prior to the open, investors received the news that second quarter GDP was revised up to 2.5% from 1.7%. The consensus expected the reading to be revised to 2.1%. Real final sales were revised up to 1.9% from 1.3%.
Overall, the upward revision to GDP growth does not suggest that the underlying currents of weak growth are ending. Almost the entire upward revision came from a stronger-than-originally reported trade deficit, which is likely to reverse in the third quarter. That means the increase in GDP pulled potential growth from the third quarter into the second and was not the result of a strengthening economic situation.
Looking back at today's remaining data, the initial claims level fell to 331,000 for the week ending August 24 from an upwardly revised 337,000 (from 336,000) for the week ending August 17. The consensus expected the initial claims level to drop to 330,000. It seems that the initial claims level has stabilized at roughly 330,000 following a volatile July when seasonal adjustment biases made it difficult to examine layoff trends. This level signifies a sizable reduction from where claims were at the beginning of the summer and suggests a solid improvement in labor conditions.
Among major stocks under focus, Verizon provided considerable support after reports indicated the company has resumed talks with Vodafone about acquiring Vodafone's 45.0% stake in Verizon Wireless.
Technology also displayed notable strength as top-weighted components like Google and Microsoft climbed 0.8% and 1.6%, respectively. Equities slipped during the final hour of action.
A stronger dollar index following better-than-anticipated GDP data and initial claims confirming a strengthening labor market put pressure on crude oil and precious metals. Precious metals traded in negative territory during all of today's floor trade. December gold dipped to a session low of $1402.10 per ounce and eventually settled with a 0.4% loss at $1412.60 per ounce. December silver pulled back from its session high of $24.49 per ounce and settled 1.3% lower at $24.13 per ounce.
October crude oil declined for the first time in six sessions. It brushed a session high of $11.07 per barrel in late afternoon trade but sold off sharply to a session low of $108.40 per barrel moments before the close. It settled at $108.47 per barrel, booking a 1.5% loss.
Natural gas fell from its session high of $3.65 per MMBtu into negative territory following inventory data that showed a build of 67 bcf when a smaller build of 62-63 bcf was anticipated. Despite dropping to a session low of $3.51 per MMBtu, it recovered back into the black and booked a 1.1% gain as it closed at $3.62 per MMBtu.
For every five stocks falling, roughly eight rose on the New York Stock Exchange, where 546 million shares traded. Composite volume approached 2.5 billion.
Tomorrow, July personal income, personal spending, and core PCE prices will all be reported at 8:30 ET. The August Chicago PMI report will cross the wires at 9:45 ET and the final reading of the August Michigan Consumer Sentiment Survey will be released at 9:55 ET.
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