Stocks Close Modestly Higher Following Early Upward Move - U.S. Commentary

(RTTNews) - After showing a strong move to the upside in early trading on Thursday, stock gave back some ground as the day progressed but managed to close modestly higher. The slim gains came on the heels of yesterday's rally, with the major averages further offsetting their recent pullback.

The major averages ended the day in positive territory but well off their highs for the session. The Dow edged up 38.97 points or 0.2 percent to 18,039.37, the Nasdaq inched up 5.82 points or 0.1 percent at 5,082.51 and the S&P 500 crept up 3.66 points or 0.2 percent to 2,108.86.

The initial strength on Wall Street partly reflected a positive reaction to a report from the Commerce Department showing a notable increase in retail sales in the month of May.

The Commerce Department said retail sales jumped by 1.2 percent in May, matching economists' consensus estimate.

The report also showed upward revisions to sales in the two previous months, easing concerns about recent signs of sluggishness in the U.S. economy.

James Knightley, an economist at ING Bank, said, "This report backs up the assumption that we didn't see a change in consumer psyche - that of saving rather than spending."

"Indeed, it is pretty clear that the weakness at the start of the year was weather related," he added. "This view is backed up by the rebound in housing activity and the decent payrolls number for April."

Buying interest waned not long after the open, however, as traders expressed continued concerns about outlook for monetary policy as well as Greece's struggles to reach an agreement with its creditors.

Some negative sentiment was subsequently generated by news that the International Monetary Fund has halted bailout talks with Greece.

"The ball is very much in Greece's court," IMF spokesman Gerry Rice told reporters. "There are major differences between us in most key areas. There has been no progress in narrowing these differences."

The remarks offset recent optimism generated by reports suggesting that Greece was close to an agreement to avoid a default.

Sector News

Most of the major sectors ended the day showing only modest moves, although considerable strength was visible among railroad stocks.

Reflecting the strength in the railroad sector, the Dow Jones Railroads Index surged up by 1.7 percent, climbing further off the ten-month closing low set on Tuesday. CSX Corp. (CSX) helped to lead the way higher, climbing by 2.9 percent.

Biotechnology and trucking stocks also saw some strength on the day, although buying interest was relatively subdued.

On the other hand, gold stocks fell sharply on the day, dragging the NYSE Arca Gold Bugs Index down by 2.1 percent. With the drop, the index fell to a five-month closing low.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for August delivery falling $6.20 to $1,180.40 an ounce.

Oil service stocks also saw notable weakness, moving lower along with the price of crude oil. With crude for July delivery sliding $0.66 to $60.77 a barrel, the Philadelphia Oil Service Index dropped by 1.3 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged up by 1.7 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index rose by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries moved sharply higher, regaining some ground following the sell-off seen over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 9.5 basis points to 2.383 percent.

Looking Ahead

Trading on Friday may be impacted by another batch of U.S. economic data, with traders likely to keep an eye on reports on producer price inflation and consumer sentiment.