Major Averages Rise With Better Volume and Positive Breadth
Stocks were climbing after the number of new jobless claims dropped more than expected, bolstering optimism about the economic recovery.
At 9:58 a.m. ET, the Dow Jones Industrial Average ($INDU) was up by 75 points, or 0.7%, at 10,462. The S&P 500 ($INX) was up by 11 points, or 1%, at 1,110. The Nasdaq ($COMPX) was rising 18 points, or 0.8%, to 2,247.
The Labor Department said the number of new claims for unemployment insurance fell by 27,000 to 451,000 during the week ended Sept. 4, suggesting that U.S. companies are laying off fewer workers. Economists had expected claims to decline by 2,000, according to Briefing.com
The Commerce Department said the trade deficit shrank by 14% to $42.8 billion in July as imports declined. Economists had expected the gap to narrow to $47.3 billion from a revised $49.8 billion in June, according to Briefing.com. In July, U.S. exports rose $2.8 billion to $153.3 billion and imports fell by $4.2 billion $196.1 While the strong jobs report was boosting optimism on Wall Street, two groups cut their economic growth forecasts.
The Blue Chip Economic Indicators report predicts U.S. gross domestic product to expand by 2.7% this year, 0.6 percentage point less than its June forecast. The panel of 50 economists blamed low consumer spending, business investment and construction.
The Organization for Economic Cooperation and Development said the economies of the Group of Seven countries, which include the U.S., will grow by an annual rate of 1.5% in the second half, less than the 1.75% previously forecast.
Today brings an influx of energy supply data after the weekly crude oil inventory reports from the American Petroleum Industry and the Energy Information Administration were delayed a day because of the long holiday weekend.
At 10:30 a.m., the EIA is expected to report an increase of 56 billion to 60 billion cubic feet in natural gas storage levels for the week ended Sept. 3, according to analysts polled by Platts.
At 11 a.m., the EIA will follow up with its oil inventories report. According to Platts, analysts expect oil supplies to have declined by 730,000 barrels and gasoline to have fallen by 820,000. Distillates are projected to rise by 940,000 barrels.
Late Wednesday, the American Petroleum Industry reported a larger-than-expected drop of 7.31 million barrels in crude oil supplies for the week ended Sept. 3.
Crude oil for October delivery was adding 86 cents at $75.53 a barrel.
In corporate news, the U.K. Financial Authority said Goldman Sachs (GS)must pay a 17.5 million-pound ($26.92 million) penalty for failing to disclose that it was being investigated for fraud in the U.S. Goldman Sachs shares were rising 1.9% to $150.36.
McDonald's (MCD) said sales at stores open at least a year increased 4.9% in August from a year earlier after climbing 7% in July. McDonald's shares were falling 2.9% to $73.86.
BMW credited strong Asian demand, particularly in China, for a sales jumpof 12.5% in August.
The benchmark 10-year Treasury note was down by 5/32, increasing the yield to 2.670%.
The dollar index showed the greenback to be trading slightly lower against a basket of currencies. The December gold contract, the most actively traded gold future, was up by 30 cents at $1,257.80 an ounce.
Global stocks were rising Thursday after the Bank of England opted to keep interest rates at 0.5% for the 18th consecutive month.
The FTSE in London was adding 1.2%, and the DAX in Frankfurt was ahead by 0.9%. Hong Kong's Hang Seng inched up 0.4%, while Japan's Nikkei gained 0.8%.
Stocks rallied across the globe as the dollar fell and EU debt woes eased. Wednesday's volume totals were reported higher on the NYSE and on the Nasdaq exchange, which was a small reassurance suggesting that large institutions were accumulating stocks. Advancers led decliners by over a2-to-1ratio on the NYSE and almost a2-to-1ratio on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.
The bulls returned from a one day hiatus and sent stocks unanimously higher as the dollar fell and EU debt woes eased. Demand for Portugal's debt was strong enough to allay concerns of another imminent EU debt crisis. Elsewhere, a handful of high-ranked stocks raced higher, which bodes well for this one-week rally. Stocks lost a little ground after the Federal Reserve released its Beige Book which showed the economy was easing across much of the country.
Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. It was encouraging to see a flurry of high-ranked leaders trigger fresh technical buy signals and break out of sound bases in recent sessions. The next important level to watch for the major averages are their respective 200-day moving average (DMA) lines. It is important to note that approximately75%of FTDs lead to new sustained rallies, while25%fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.
