(RTTNews) - Stocks rose by substantial margins on Thursday, as the day’s upbeat third quarter GDP report generated risk appetite and drove traders to fund a rally in the stock market. The major averages all finished firmly in positive territory, partly offsetting their recent losses.

The Commerce Department said its advance estimate showed that GDP increased at an annual rate of 3.5 percent in the third quarter compared to a 0.7 percent decrease in the second quarter. Economists had been expecting GDP to increase by 3.2 percent.

The considerable jump in GDP prompted some traders to shrug off the latest news on the labor market, even though today’s jobs report from the Labor Department showed that jobless claims did not fall by as much as economists had expected.

The Labor Department said jobless claims in the week ended October 24th edged down to 530,000 from the previous week’s unrevised figure of 531,000. The drop was smaller than the decrease of about 6,000 expected by economists.

On the earnings front, Procter & Gamble (PG), Exxon Mobil (XOM), AutoNation (AN) and Motorola (MOT) were among the firms reporting on the day, largely topping bottom line forecasts but failing to meet revenue expectations.

In other news, the Federal Reserve concluded its treasury buyback program this morning, purchasing the last batch of $300 billion in bonds. The program began on March 25th as one of the measures to ease the grip of the recession on the U.S. economy.

As one of the components of its economic intervention has wound to a close, economists have begun to speculate as to the next step in the Fed’s exit strategy, including a possible hike in interest rates.

The major averages all closed sharply higher, just off their best levels of the day. The Dow closed up by 199.89 points or 2.1 percent at 9,962.58, the Nasdaq advanced by 37.94 points or 1.8 percent to 2,097.55 and the S&P 500 rose by 23.48 points or 2.3 percent to 1,066.11.

Sector News

Steel and gold stocks saw some of the day’s strongest gains, with the NYSE Arca Steel Index and the NYSE Arca Gold Bugs Index climbing by 6.3 percent and 5.3 percent, respectively.

The steel index bounced off the seven-week closing low it set on Wednesday, while the gold index bounced off of a two month closing low. The gains by gold stocks came as the precious metal jumped $16.60 to $1,047.10 an ounce in commodities trading on the NYMEX.

Healthcare provider stocks also rose by considerable margins, with the Morgan Stanley Healthcare Provider Index posting a gain of 4.7 percent. The index was able to move off of the three and a half week low it set yesterday.

Commercial real estate, banking, natural gas, oil service and airline stocks also moved substantially higher on the day, largely moving off of the lows set after yesterday’s profit taking.

Dow Components

Alcoa (AA) led the Dow higher, with shares of the aluminum producer surging up by 9 percent. With the jump, the stock saw some upside after setting a seven-week low on Wednesday.

Procter & Gamble also rose, although by a more modest margin, posting a gain of 4 percent. Shares of the consumer products giant closed at their best price in nearly ten months.

The gain by P&G came following news that the firm’s first-quarter net earnings were $1.06 per share, beating the $0.99 per share estimated by Wall Street analysts.

Caterpillar (CAT), American Express (AXP), Bank of America (BAC) JP Morgan Chase (JPM) and Boeing (BA) also posted notable gains, while Merck (MRK) was the only decliner in the blue chip index, falling by 2.3 percent. Shares of the drug giant ended the day at a one-month low.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region extended their losses on Thursday. Japan’s benchmark Nikkei 225 Index fell by 1.8 percent on the day, while Hong Kong’s Hang Seng Index closed down by 2.3 percent.

Meanwhile, the major European markets closed notably higher on the day. The U.K.’s FTSE 100 rose by 1.1 percent, while the French CAC 40 Index and the German DAX Index gained 1.4 percent and 1.7 percent, respectively.

In the bond markets, treasuries saw steep losses on the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.501 percent, posting a gain of 9.0 basis points.

Looking Ahead

Friday, traders will have a chance to react to quarterly reports from Chevron (CVX), Coventry (CVH), Las Vegas Sands (LVS) and Ameren Corp (AEE), among others. Data on personal income and spending, Chicago business conditions and consumer sentiment may also be in focus.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved

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

Subscribe by RSS Subscribe by Email