Stocks Close Mostly Higher Following Upbeat GDP Data - U.S. Commentary

(RTTNews) - After ending the previous session modestly lower, stocks moved mostly higher over the course of the trading day on Thursday. The gains on the day more than offset yesterday's losses, lifting the major averages to their best closing levels in a month.

The major averages all closed in positive territory, although the Dow outperformed its counterparts. While the Dow surged up 221.11 points or 1.3 percent to 17,195.42, the Nasdaq rose 16.91 points or 0.4 percent to 4,566.14 and the S&P 500 climbed 12.35 points or 0.6 percent to 1,994.65.

The strength on Wall Street partly reflected a positive reaction to a report from the Commerce Department showing stronger than expected third quarter GDP growth.

The Commerce Department said GDP increased by 3.5 percent in the third quarter compared to the 4.6 percent growth seen in the second quarter. Economists had expected GDP to climb by 3.0 percent.

The stronger than expected growth reflected positive contributions from trade and defense spending as well as a continued increase in consumer spending.

The report also showed a slowdown in the pace of core consumer price inflation, easing concerns about a near-term increase in interest rates.

A separate report released by the Labor Department showed a modest increase in initial jobless claims in the week ended October 25th.

The report said initial jobless claims edged up to 287,000, an increase of 3,000 from the previous week's revised level of 284,000. Economists had expected jobless claims to tick up to 285,000.

The particularly strong gain posted by the Dow largely reflected a rally by shares of Visa (V), with the credit card giant soaring by 10.2 percent after reporting better than expected fourth quarter earnings.

Sector News

Extending a recent upward trend, networking stocks moved sharply higher over the course of the trading day. The NYSE Arca Networking Index surged up by 2.9 percent, reaching its best closing level in over a month.

Alcatel-Lucent (ALU) helped to lead the networking sector higher, jumping by 16 percent after reporting a narrower third quarter loss.

Utilities stocks also showed a strong move to the upside on the day, driving the Dow Jones Utilities Average up by 2.1 percent. With the gain, the average reached a new record closing high.

Pharmaceutical and biotechnology stocks also saw notable strength, with the NYSE Arca Pharmaceutical Index and the NYSE Arca Biotechnology Index climbing by 2.1 percent and 1.7 percent, respectively. The biotech index also reached a new record closing high.

On the other hand, substantial weakness was visible among gold stocks, as reflected by the 7.4 percent loss posted by the NYSE Arca Gold Bugs Index. The loss pulled the index down to a six-year closing low.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, as gold for December delivery plunged $26.30 to $1,198.60 an ounce.

Trucking, semiconductor, and natural gas stocks also came under pressure on the day, limiting the upside for the broader markets.

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 advanced by 0.7 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets all moved higher over the course of the session. While the French CAC 40 Index climbed by 0.7 percent, the German DAX Index rose by 0.4 percent and the U.K.'s FTSE 100 Index edged up by 0.2 percent.

In the bond market, treasuries regained some ground after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.8 basis points to 2.305 percent.

Looking Ahead

Another batch of U.S. economic data could impact trading on Friday, with traders likely to keep an eye on reports on personal income and spending, consumer sentiment, and Chicago-area business activity.

On the earnings front, Exxon Mobil (XOM), Anheuser-Busch InBev (BUD), Chevron (CVX), Clorox (CLX), and Sony (SNE) are among the companies due to report their quarterly results before the start of trading on Friday.