Stocks Close Modestly Higher But Off Best Levels Of The Day - U.S. Commentary

(RTTNews) - Following the lackluster performance seen in the previous session, stocks saw modest strength during trading on Thursday. The major averages all moved to the upside, although buying interest was somewhat subdued.

The major averages closed in positive territory but well off their highs of the session. The Dow climbed 55.64 points or 0.2 percent to 24,782.29, the Nasdaq edged up 4.40 points or 0.1 percent to 6,965.36 and the S&P 500 rose 5.32 points or 0.2 percent to 2,684.57.

Optimism about the economic impact of the Republican tax reform bill contributed to the strength on Wall Street after GOP lawmakers managed to send the legislation to President Donald Trump's desk on Wednesday.

The reaction to the passage of the bill has been somewhat subdued thus far, however, as traders question if the potential impact of the legislation has already been priced into the markets.

Traders were also digesting a slew of economic data, including a report from the Labor Department showing a bigger than expected increase in first-time claims for U.S. unemployment benefits in the week ended December 16th.

The report said initial jobless claims climbed to 245,000, an increase of 20,000 from the previous week's unrevised level of 225,000. Economists had expected jobless claims to rise to 234,000.

A separate report from the Commerce Department showed economic activity in the U.S. unexpectedly grew at a slightly slower than previously estimated rate in the third quarter.

The report said real gross domestic product surged up by 3.2 percent in the third quarter compared to the previously estimated 3.3 percent jump. Economists had expected the pace of growth to be unrevised.

Despite the downward revision, the GDP growth seen in the third quarter still reflects a modest acceleration from the 3.1 percent increase in the second quarter.

Meanwhile, the Philadelphia Federal Reserve released a report showing an unexpected rebound in the pace of growth in regional manufacturing activity in the month of December.

The Philly Fed said its diffusion index for current general activity climbed to 26.2 in December from 22.7 in November, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to drop to 21.5.

A report from the Conference Board also showed a slightly bigger than expected increase by its index of leading economic indicators.

The Conference Board said its leading economic index climbed by 0.4 percent in November after jumping by 1.2 percent in October. Economists had expected the index to rise by 0.3 percent.

Sector News

Energy stocks saw substantial strength on the day, moving higher along with the price of crude oil. Crude for February delivery rose $0.27 to $58.36 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index spiked by 3.5 percent, the NYSE Arca Natural Gas Index shot up by 2.6 percent and the NYSE Arca Oil & Gas Index jumped by 1.8 percent.

Significant strength was also visible among financial stocks, with the Dow Jones Banks Index climbing by 1.5 percent and the NYSE Arca Broker/Dealer Index rising by 1.1 percent.

Steel, airline and housing stocks also saw strength on the day, while utilities, semiconductor, and electronic storage stocks showed notable moves to the downside.

PG&E (PCG) led the utilities sector lower after suspending its dividend due to uncertainty related to potential liabilities associated with the October wildfires in Northern California.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index advanced by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1.1 percent, the French CAC 40 Index climbed by 0.6 percent and the German DAX Index rose by 0.3 percent.

In the bond market, treasuries moved modestly higher after trending lower in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.6 basis points to 2.481 percent.

Looking Ahead

Another batch of economic data may impact trading on Friday, with reports on personal income and spending, durable goods orders, new home sales and consumer sentiment likely to attract attention.

Traders are also likely to keep an eye on developments in Washington, as lawmakers seek to pass a short-term spending bill to avoid a government shutdown.