Stocks Close Higher Following Slew Of Data, Yellen Comments - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading session on Thursday after initially showing a lack of direction. With the upward move, the three major averages all ended the day within striking distance of record closing highs.

The major averages finished the session near their best levels of the day. The Dow edged up 35.68 points or 0.2 percent to 18,903.82, the Nasdaq advanced 39.39 points or 0.7 percent to 5,333.97 and the S&P 500 climbed 10.18 points or 0.5 percent to 2,187.12.

The strength that emerged on Wall Street came following the release of a batch of largely upbeat U.S. economic data, including a report from the Commerce Department showing that housing starts jumped to a nine-year high in October.

The Commerce Department said housing starts surged up by 25.5 percent to an annual rate of 1.323 million in October after tumbling by 9.5 percent to a revised 1.054 million in September.

Economists had expected housing starts to jump by 11.6 percent to a rate of 1.168 million from the 1.047 million originally reported for the previous month.

With the much bigger than expected increase, housing starts rose to their highest level since reaching a rate of 1.330 million in August of 2007.

The report also said building permits, an indicator of future housing demand, edged up by 0.3 percent to a rate of 1.229 million in October from 1.225 million in September. Building permits had been expected to drop by 2.9 percent to a rate of 1.190 million.

The Labor Department also released a report showing that initial jobless claims fell to their lowest level in over forty years in the week ended November 12th.

The report said initial jobless claims fell to 235,000, a decrease of 19,000 from the previous week's unrevised level of 254,000. Economists had expected jobless claims to inch up to 257,000.

The unexpected decline pulled jobless claims down to their lowest level since hitting 233,000 in November of 1973.

A separate Labor Department report said consumer prices increased in line with economist estimates in the month of October.

Positive sentiment may also have been generated by Federal Reserve Chair Janet Yellen's dismissal of speculation she may resign due to criticism from President-elect Donald Trump.

"I was confirmed by the Senate to a four-year term, which ends at the end of January of 2018, and it is fully my intention to serve out that term," Yellen said in testimony before Congress's Joint Economic Committee.

Yellen's comments may have generated optimism about stability at the Fed as it prepares to begin normalizing monetary policy.

In prepared remarks, Yellen said the Fed has determined that an increase in interest rates could become appropriate "relatively soon" if incoming data provides further evidence of continued progress toward the central bank's objectives.

Sector News

Extending a recent upward trend, electronic storage stocks showed a strong move to the upside on the day. The NYSE Arca Disk Drive Index surged up by 2.2 percent to its highest closing level in a year.

NetApp (NTAP) helped to lead the storage sector higher, jumping by 6.3 percent after reporting better than expected second quarter earnings and providing upbeat guidance.

Airline stocks also saw significant strength, resulting in a 1.7 percent advance by the NYSE Arca Airline Index. With the gain, the index reached its highest closing level in well over a year.

Considerable strength was also visible among software stocks, as reflected by the 1.6 percent gain posted by the Dow Jones Software Index. The index reached a sixteen-year closing high.

Software giant Microsoft (MSFT) moved notably higher after Goldman Sachs upgraded its rating on the company's stock to Buy from Neutral.

Housing, financial, and biotechnology stocks also saw notable strength, while gold stocks fell sharply amid a decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Thursday. Hong Kong's Hang Seng Index edged down by 0.1 percent, while China's Shanghai Composite Index inched up by 0.1 percent. Japan's Nikkei 225 Index closed nearly unchanged.

Meanwhile, the major European markets all moved higher over the course of the session. While the German DAX Index crept up by 0.2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index advanced by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries moved back to the downside after turning higher over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.3 basis points to 2.276 percent.

Looking Ahead

Following the slew of U.S. economic data released this morning, the economic calendar for Friday is relatively quiet, although traders are likely to keep an eye on remarks by several Fed officials.

On the earnings front, Applied Materials (AMAT), Gap (GPS), Intuit (INTU) and Williams-Sonoma (WSM) are among the companies releasing their quarterly results after the close of today's trading.

Abercrombie & Fitch (ANF) and Foot Locker (FL) are also due to report their results before the start of trading on Friday.