(RTTNews) - After showing a notable turnaround over the course of the morning, stocks are hovering in positive territory in mid-afternoon trading on Thursday. The initial weakness came as investors responded to some weak corporate and economic news.

Helping to drive the markets lower in early trading, a report from the Labor Department showed that first-time claims for unemployment benefits unexpectedly jumped to their highest level in over twenty-six years in the week ended January 31st.

The report showed that initial jobless claims rose to 626,000 from the previous week’s revised figure of 591,000. Economists had expected jobless claims to edge down to 580,000 from the 588,000 originally reported for the previous week.

Additionally, the Commerce Department’s monthly report on factory orders was released shortly after the market open and showed a bigger than expected 3.9 percent decrease in orders in December. This marked the fifth consecutive monthly decrease in orders.

In an interview with RTT News, Paul Nolte, director of investments at Hinsdale Associates said that the weak economic reports released earlier are not surprising and will continue to be poor for much of the year.

“We are in the worst part of the economic cycle at this point,” Nolte said, predicting that moderation in the data won’t occur until at least the end of the year.

In terms of the market, Nolte said we are in the early phases of putting in a bottom, reminding investors that it’s a process, not an event. Though he predicted a lot of volatility and possibly lower levels this year, Nolte said he is “absolutely buying the dips.”

“Prices are very inexpensive and priced to provide above average rates of return” for investors with a three to five year time horizon, he added.

In other news, the questionable use of some of the $350 billion already distributed from the government’s $700 billion financial rescue package took center stage today at the Senate Banking Committee’s hearing on the funds.

Regulators were critical of the use of the funds by the Treasury Department, noting that the department overpaid for some assets and warning that the long-term success of the program is in jeopardy if changes are not made.

The major averages have seen some further upside in the past few minutes, rising to new highs for the session. The Dow is currently up 146.63 at 8,103.29, the Nasdaq is up 35.90 at 1,550.95 and the S&P 500 is up 18.32 at 850.55.

Dow Components

A vast majority of the Dow components have climbed into positive territory over the course of the trading day, contributing to the turnaround by the blue chip index.

Wal-Mart (WMT) is turning in one of the Dow’s best performances, with the retail giant currently up 4 percent after ending the previous session at its worst closing level in over a year. The gain comes after the company announced its sales results for January.

The company said its January comparable store sales, including fuel, rose 1.5 percent, while sales excluding fuel rose 2.1 percent. Looking forward, Wal-Mart expects U.S. comparable sales without fuel during the period from January 31 through May 1 to increase 1 percent to 3 percent.

Additionally, American Express (AXP) is up 7.6 percent, moving higher along with peers Visa (V) and MasterCard (MA), which are posting strong gains after reporting their quarterly results. Currently, Visa and MasterCard are up 11.8 percent and 13.4 percent, respectively.

Alcoa (AA), JP Morgan (JPM), and Citigroup (C) are also posting notable gains, rising 4.5 percent, 4.2 percent, and 4 percent, respectively.

At the other end of the spectrum, Hewlett-Packard (HPQ) is one of the biggest losers, down 2 percent on the day. The weakness in Hewlett-Packard comes as Dell (DELL) is down 3.7 percent after being downgraded to Underweight from Neutral at J.P. Morgan.

JP Morgan said it expects continued weakness in PC sales, with unit counts falling 13.5 percent in 2009.

Sector News

As the broader markets continue to show strength, the vast majority of the major sectors also continue to show strength during mid-afternoon trading.

Some of the most significant strength is coming from stocks within the health insurance sector. The noteworthy strength is illustrated by the 5 percent gain being shown by the Morgan Stanley Healthcare Payor Index. With the advance, the index has climbed to its highest level in over three months.

Brokerage and semiconductor stocks are showing other notable gains, while banking stocks have also moved sharply higher after posting some of the widest losses earlier. The Kbw Bank Index is currently up 5.1 percent on the day.

Other Markets

Most of the stock markets across the Asia-Pacific region ended Thursday’s session lower following overnight weakness on Wall Street. Japan’s benchmark Nikkei 225 index ended the session down 1.1 percent.

Meanwhile, the major European markets finished the session mixed after seeing notable weakness for much of the trading day. While the German DAX Index closed up 0.4 percent and the U.K.’s FTSE 100 Index posted a slight gain, the French CAC 40 Index closed down 0.1 percent.

In the bond market, treasuries have moved back near the unchanged line after showing a lack of direction earlier in the session Subsequently, the yield on the benchmark ten-year note is currently up less than a basis point at 2.917 percent.

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

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