Stocks Rally Amid Another Rebound By Oil Prices - U.S. Commentary

(RTTNews) - After showing a lack of direction throughout the morning, stocks moved notably higher over the course of the trading day on Thursday. With the upward move, the Dow and the S&P 500 reached their best closing levels in over a month.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 212.30 points or 1.3 percent to 16,697.29, the Nasdaq climbed 39.60 points or 0.9 percent to 4,582.21 and the S&P 500 surged up 21.90 points or 1.1 percent to 1,951.70.

Stocks once again benefited from a substantial rebound by the price of crude oil, which has been a key driver of the markets in recent weeks.

Crude for April delivery eventually ended the session up by $0.92 at $33.07 a barrel after hitting a low of $31.07 a barrel.

The rebound by the price of oil was attributed to reports that OPEC and non-OPEC oil ministers will meet next month to discuss freezing production.

On the U.S. economic front, the Commerce Department released a report before the start of trading showing a much bigger than expected rebound in durable goods orders in the month of January.

The report said durable goods orders jumped by 4.9 percent after slumping by a revised 4.6 percent in December. Economists had expected durable goods orders to climb by 2.0 percent.

Excluding orders for transportation equipment, durable goods orders climbed by 1.8 percent in January after falling by 0.7 percent in December. Ex-transportation orders had been expected to come in flat.

Despite the strong headline figure, Rob Carnell, Chief International Economist at ING Commercial Banking, said the trend in orders and shipments is not giving a particularly clear message.

"With yet another inconclusive set of data, markets will make of this whatever they want," Carnell said. "But the fact remains, the direction of the U.S. economy at this juncture remains far from clear."

He added, "In consequence, the Fed's response remains in the balance, though we feel the hurdles for further tightening are high, so at the very least, this data provides no excuse for a near term tightening."

A separate report from the Labor Department showed a modest rebound in initial jobless claims in the week ended February 20th.

The report said initial jobless claims climbed to 272,000, an increase of 10,000 from the previous week's unrevised level of 262,000. Economists had expected jobless claims to rise to 270,000.

Sector News

Commercial real estate stocks showed a strong move to the upside on the day, driving the Morgan Stanley REIT Index up by 2.1 percent. With the gain, the index reached its best closing level in a month.

Mack-Cali Realty (CLI) helped to lead the sector higher, jumping by 4.5 percent after reporting better than expected fourth quarter results.

Significant strength also emerged among brokerage stocks, as reflected by the 1.8 percent gain posted by the NYSE Arca Broker/Dealer Index. Stifel Financial (SF) posted a standout gain, bouncing off a four-year closing low.

Housing stocks also moved notably higher over the course of the session, resulting in a 1.8 percent gain by the Philadelphia Housing Sector Index. The gain lifted the index to its best closing level in well over a month.

Software, pharmaceutical, internet, and chemical stocks also saw considerable strength, while weakness remained visible among electronic storage stocks.

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 surged up by 1.4 percent, while Hong Kong's Hang Seng Index tumbled by 1.6 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index shot up by 2.5 percent, the French CAC 40 Index spiked by 2.2 percent and the German DAX Index jumped by 1.8 percent.

In the bond market, treasuries managed to remain firmly positive despite the strength that emerged on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.5 basis points to 1.697 percent.

Looking Ahead

Economic data may attract some attention on Friday, with traders likely to keep an eye on reports on fourth quarter GDP, personal income and spending, and consumer sentiment.