(RTTNews) - Following an upbeat report on the pace of economic growth, stocks are showing considerable strength in morning trading on Thursday. Nonetheless, going into a holiday weekend, trading is light, heightening volatility.

The strength in the markets comes after the Department of Commerce released its revised second quarter GDP data, which showed that the economy grew at a faster rate than economists expected. The better than expected growth was primarily due to an upward revision to exports.

The report showed that gross domestic product increased at an annual rate of 3.3 percent in the second quarter compared to the advance estimate of 1.9 percent growth. Economists had been expecting GDP growth for the quarter to be revised up to 2.7 percent.

A notable upward revision to the pace of export growth contributed to the faster than expected GDP growth, with the report showing that exports increased by 13.2 percent in the second quarter compared to the previous estimate of 9.2 percent growth.

With the upward revision, second quarter GDP growth far outpaced the 0.9 percent growth that was seen in the first quarter as well as the 0.2 percent contraction in the fourth quarter.

Separately, the Labor Department released its report on initial jobless claims in the week ended August 23rd on Thursday, showing that jobless claims fell in line with economist estimates compared to an upwardly revised reading for the previous week.

Meanwhile, the price of oil has come off of its earlier highs, although it remains slightly above the unchanged line. The price of crude is currently up $0.06 at $118.22 a barrel. The strength comes from concerns that Tropical Storm Gustav will interrupt supplies from the Gulf of Mexico.

In other news, Fannie Mae (FNM) revealed major changes to its top management after the closing bell on Wednesday. The mortgage backer appointed David Hisey as Chief Financial Officer, Peter Niculescu as Chief Business Officer and Michael Shaw as Chief Risk Officer.

Fannie Mae said the senior executive appointments, which are effective immediately, were aimed at overseeing and implementing its recently announced capital management and credit loss reduction plan.

In recent trading, the major averages have been hovering near their best levels of the day. The Dow is currently up 97.38 at 11,599.89, the Nasdaq is up 11.50 at 2,393.96 and the S&P 500 is up 8.07 at 1,289.73.

Sector News

Transportation stocks, including airlines, are seeing considerable strength in morning trading despite the modest increase in oil prices. The Dow Jones Transportation average is up 1.6 percent, while the Amex Airline Index is climbing 4.3 percent.

Within the sector, UAL Corp. (UAUA) is climbing 5.2 percent, bouncing off of a three-week closing low set on Wednesday. On Wednesday, the airline announced plans to cut 1,550 flight attendant jobs as it reduces flying in the fall. The job cuts equal about 10 percent of its cabin work force.

Elsewhere in the transportation sector, railroad stocks are also sharply higher. The Dow Jones U.S. Railroads Index is up 1.5 percent, extending a recent uptrend. Earlier in the day, the index set a four-week intraday high.

Some resource stocks are higher as well, benefitting from higher commodity prices. Gold and steel stocks are among the most notable gainers. The Amex Gold Bugs Index is up 1.1 percent, while the Amex Steel Index is 1.2 percent higher.

Networking stocks are also showing strength, with the Amex Networking Index climbing 1 percent. The index is adding to gains posted in the previous two sessions. Among networking stocks, Anixter International (AXE) is turning in one of the best performances, up 3.5 percent.

On Wednesday, Anixter said that it would acquire two overseas fastener distributors for about $40 million in cash plus the assumption of about $19 million in debt.

Other stocks that are seeing notable gains include bank, software and disk drive stocks. The S&P Bank Index is up 1.2 percent, the Amex Software Index is up 1 percent and the Amex Disk Drive Index is up 0.8 percent.

On the other hand, some health insurance stocks are seeing notable losses, with the Morgan Stanley Healthcare Payor Index falling 0.6 percent. Centene (CNC) is among the biggest decliners. The stock is down 5.2 percent after being downgraded to a Hold rating at Stifel Nicolaus.

Stocks Driven By Analysts Comments

Among individual stocks, Energen (EGN) is seeing significant buying interest after being upgraded by an analyst at UBS. The analyst upgraded the stock to a Buy rating from a Neutral rating, while maintaining the stock’s $80 price target.

Shares of the energy holding company are currently trading higher by 4.5 percent, adding to gains posted in the previous two sessions. Earlier in the session, the stock set a nearly three week intraday high.

Tempur Pedic International (TPX) is also posting a notable gain after an analyst at Longbow upgraded the stock to a Buy rating from a Neutral rating. The analyst also set a price target of $15. The stock is up 3.6 percent, extending a recent uptrend.

On the other hand, Coca Cola (KO) is showing weakness after a Credit Suisse analyst downgraded the stock to a Neutral rating due to an increasingly difficult U.S. market. The analyst also lowered Coca Cola’s price target to $57 from $60. Shares of the beverage maker are currently down 0.9 percent.

Other Markets

Stock markets across the Asia-Pacific region closed mixed on Thursday in seesaw trading despite Wall Street finishing firm overnight. Japan’s benchmark Nikkei 225 index closed up 0.1 percent.

The major European markets are trading higher on Thursday, reversing some of the losses in the past two sessions. The French CAC 40 Index is up 1.8 percent compared to a 1.5 percent gain by the German DAX Index. The U.K.’s FTSE 100 Index is currently advancing 1.3 percent.

On the economic front, the German Federal Statistical Office reported today that the number of employed persons rose 1.4 percent in July compared to the year-ago period. On a monthly basis, the number of persons in employment eased 0.1 percent. The seasonally adjusted unemployment rate stood at 7.3 percent in July compared with 8.4 percent in the year-ago period.

Meanwhile, treasuries are drifting lower on the strength of the stock markets as well. Subsequently, the yield on the benchmark ten-year note is currently up 3.6 basis points at 3.808 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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