Stocks Holding Onto Considerable Gains In Mid-Afternoon Trading - U.S. Commentary

Thu. November 05, 2009; Posted: 02:37 PM

(RTTNews) - Stocks remain firmly positive in mid-afternoon dealing on Thursday, as a batch of better-than-expected employment data has boosted risk appetite. The major averages are all in positive territory, looking to snap two days of lackluster movement.

Boosting trader sentiment this morning was data from the Labor Department showing that first-time claims for unemployment benefits fell by more than economists had been anticipating in the week ended October 31st, dropping to their lowest levels since early January.

In a separate report, the Labor Department said that labor productivity increased by much more than expected in the third quarter, with the report also showing a bigger than expected decrease in labor costs.

The major averages have moved roughly sideways in recent trading, holding onto substantial gains. The Dow is currently up 164.45 at 9,966.59, the Nasdaq is up 45.26 at 2,100.78 and the S&P 500 is up 16.30 at 1,062.80.

Dow Components

Most of the Dow components are in positive territory, contributing to the solid triple digit gain being shown by the blue chip index in mid-afternoon trading.

American Express (AXP | Quote | Chart | News | PowerRating) is one of the Dow's best performers, posting a gain of 3.8 percent. The stock is on pace to end the day at its best closing price in over year.

Among the gainers, Procter & Gamble (PG | Quote | Chart | News | PowerRating) has reached a notable benchmark, although it is posting a more modest gain, climbing by 2 percent. With the jump, the stock is poised to set a ten-month closing high.

Dow component Cisco Systems (CSCO | Quote | Chart | News | PowerRating) is also on the rise, gaining 2.7 percent, although it remains in a range. The gains come after the firm reported first quarter earnings and sales that came in above analyst estimates.

Sector News

Electronic storage stocks are showing considerable strength in mid-afternoon trading, reflecting strength in the tech sector. The NYSE Arca Disk Drive Index is posting a gain of 2.9 percent, recovering from its October losses.

Steel stocks are also moving notably higher on the day, with the NYSE Arca Steel Index advancing by 3 percent. AM Castle & Co. (CAS | Quote | Chart | News | PowerRating) has risen by 5.1 percent, looking to end the day at its best closing price in over three months.

Telecommunication, defense, health insurance, semiconductor and tobacco stocks are also on the rise, reflecting the day's broad based strength.

Notably, gains by health insurance stocks have contributed to 2.6 percent advance by the Morgan Stanley Healthcare Payor Index. The gain has the index poised to finish the day at is best closing level in roughly six weeks.

In Focus: Economic News

As mentioned above, the Labor Department reported that jobless claims fell to 512,000 from the previous week's revised figure of 532,000. Economists had been expecting jobless claims to edge down to 522,000 from the 530,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell to their lowest level since claims came in at 488,000 in early January, the last time claims were below 500,000.

Separately, the Labor Department said that productivity increased by 9.5 percent in the third quarter following a revised 6.9 percent increase in the second quarter. Economists had expected productivity to rise by 6.5 percent compared to the 6.6 percent growth originally reported for the previous quarter.

Productivity growth in the third quarter marked the fastest pace of growth since the third quarter of 2003, when productivity increased by 9.7 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Thursday. Japan's benchmark Nikkei 225 Index fell by 1.3 percent, while Hong Kong's Hang Seng Index fell 0.6 percent.

Meanwhile, the major European markets closed moderately higher on the day. The French CAC 40 Index rose by 1.1 percent, while the German DAX Index and the U.K.'s FTSE 100 advanced 0.7 percent and 0.4 percent, respectively.

In the bond markets, treasuries have moved modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 3.535 percent, posting a loss of 1.1 basis points on the day.

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