Stocks Continue To Rally In Response To 'Patient' Fed - U.S. Commentary

(RTTNews) - Stocks showed a substantial upward move during trading on Thursday, adding to the strong gains posted in the previous session. With the extended rally, the major averages further offset the sell-off that was seen in the preceding sessions.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow soared 421.28 points or 2.4 percent to 17,778.15, the Nasdaq jumped 104.08 points or 2.2 percent to 4,748.40 and the S&P 500 surged up 48.34 points or 2.4 percent to 2,061.23.

A positive reaction to the Federal Reserve's monetary policy announcement continued to contribute to the strength on Wall Street.

Traders remained focused on the Fed's statement indicating that it can be patient in beginning to normalize the stance of monetary policy.

The use of the word "patient" attracted considerable attention, although the Fed said the guidance is consistent with its previous pledge to keep rates at low levels for a "considerable time."

In her subsequent press conference, Fed Chair Janet Yellen claimed the new language in the statement does not indicate a change in policy intentions

However, Yellen went on to say that the Fed is unlikely to start the process of normalizing policy for at least the next couple of meetings.

Buying interest was also generated by a Labor Department report showing an unexpected drop in weekly jobless claims in the week ended December 13th.

The Labor Department said jobless claims slipped to 289,000, a decrease of 6,000 from the previous week's revised level of 295,000.

The drop came as a surprise to economists, who had expected jobless claims to inch up to 295,000 from the 294,000 originally reported for the previous week.

Sector News

Most of the major sectors showed strong moves to the upside on the day, reflecting the broad based buying interest on Wall Street.

Gold stocks turned in some of the best performances once again, adding to the substantial gains posted in the previous session. The NYSE Arca Gold Bugs Index surged up by 5.3 percent, climbing further off the one-month closing low set on Tuesday.

The continued rally by gold stocks came even though the price of the precious metal closed nearly flat for the second consecutive session.

Significant strength was also visible among software stocks, as reflected by the 4.5 percent gain posted by the Dow Jones Software Index. Oracle (ORCL) helped lead the sector higher after reporting better than expected second quarter results.

Computer hardware stocks also turned in a particularly strong performance, driving the NYSE Arca Computer Hardware Index up by 3.7 percent. The gain lifted the index back toward the record closing high set earlier this month.

Biotechnology, networking, railroad, healthcare and airline stocks also moved sharply higher over the course of the trading session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday following the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 2.3 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

The major European markets also saw substantial strength on the day. While the U.K.'s FTSE 100 Index shot up by 2 percent, the German DAX Index and the French CAC 40 Index soared by 2.8 percent and 3.4 percent, respectively.

In the bond market, treasuries came under pressure, extending the notable downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 5.6 basis points to 2.204 percent.

Looking Ahead

Trading activity on Friday may be somewhat subdued amid a lack of major U.S. economic data, although traders are likely to keep an eye on comments by a pair of Fed officials.

On the earnings front, Nike (NKE), Cintas (CTAS), Pier 1 Imports (PIR), and Red Hat (RHT) are among the companies releasing their quarterly results after the close of today's trading.