(RTTNews) - Stocks are continuing to post considerable gains in early afternoon trading on Thursday, as trader reaction to the day’s upbeat employment figures sparked a broad-based rally. The major averages are all in positive territory, further offsetting last week’s losses.

Before the start of trading this morning, the Labor Department reported that first-time claims for unemployment benefits in the week ended October 31st fell by more than economists had been anticipating, dropping to their lowest levels since early January.

In a separate report, the Labor Department said that labor productivity increased by much more than expected in the third quarter, with the report also showing a bigger than expected decrease in labor costs.

Retail sales data for the month of October was also on traders’ radar, with a widely mixed batch of results from Saks (SKS), JC Penney (JCP), Target (TGT), American Eagle Outfitters (AEO), Aeropostale (ARO) and Gap (GPS) polarizing the movement in the retail sector on the day.

On the earnings front, Cisco Systems (CSCO) reported first quarter adjusted net income of $0.36 per share compared to $0.42 per share a year ago, while sales for the quarter fell 12.7 percent to $9.0 billion. Analysts expected the company to earn $0.31 per share on sales of $8.74 billion.

The major averages have seen choppy movement in recent trading, hovering near their best levels of the day. The Dow is currently up 168.75 at 9,970.89, the Nasdaq is up 41.97 at 2,097.49 and the S&P 500 is up 15.16 at 1,061.66.

Sector News

Defense stocks are posting strong gains in early afternoon trading, as reflected by the 2.8 percent advance by the Philadelphia Defense Sector. The index continues to hover near October’s one-year closing high.

On of the sector’s best performances is being turned in by Gencorp (GY), which is currently up by 6.5 percent. The jump by the stock has propelled it to its best intraday price in over a year.

Telecommunication stocks are also seeing significant strength, with the NYSE Arca Telecommunications Index currently up by 2.5 percent, although it remains stuck in a recent trading range.

Qualcomm (QCOM) is one of the best performers in the sector, rising by 4.3 percent and setting a one-month intraday high. The gain comes after the firm reported disappointing fourth-quarter results but was able to extend a license contract with Samsung.

Technology, tobacco, biotechnology, trucking, housing and utility stocks are also posting notable gains on the day, reflecting the day’s broad-based rally. Meanwhile, weakness has emerged among gold stocks despite an increase by the price of the precious metal.

Stocks In The News

Sanmina-SCI (SANM) is surging higher in early afternoon trading after reporting break-even results for the fourth quarter, which topped the consensus estimate of a loss of $0.11. The company expects to report first quarter EPS between $0.10 and $0.15. The stock has shot up by 23.2 percent, recovering further from Tuesday’s two-month closing low.

Career Education (CECO) is also on the rise after its third-quarter results showed net income of $0.25 per share and revenues of $459.9 million, firmly topping the expected $0.14 per share on revenues of $437.25 million. The stock is up by 9.8 percent, bouncing off of the three and a half month closing low set on Wednesday.

On the other hand, CVS Caremark (CVS) is retreating despite reporting better than expected third quarter earnings, as the company revealed that it would not attain its goals for its pharmacy benefits management business in 2010. The stock has plunged by 19.8 percent, setting a seven-month intraday low.

In Focus: Economic News

As mentioned above, the Labor Department reported that jobless claims fell to 512,000 from the previous week’s revised figure of 532,000. Economists had been expecting jobless claims to edge down to 522,000 from the 530,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell to their lowest level since claims came in at 488,000 in early January, the last time claims were below 500,000.

Separately, the Labor Department said that productivity increased by 9.5 percent in the third quarter following a revised 6.9 percent increase in the second quarter. Economists had expected productivity to rise by 6.5 percent compared to the 6.6 percent growth originally reported for the previous quarter.

Productivity growth in the third quarter marked the fastest pace of growth since the third quarter of 2003, when productivity increased by 9.7 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Thursday. Japan’s benchmark Nikkei 225 Index fell by 1.3 percent, while Hong Kong’s Hang Seng Index fell 0.6 percent.

Meanwhile, the major European markets closed moderately higher on the day. The French CAC 40 Index rose by 1.1 percent, while the German DAX Index and the U.K.’s FTSE 100 advanced 0.7 percent and 0.4 percent, respectively.

In the bond markets, treasuries are modestly higher. Subsequently, the benchmark ten-year yield, which moves opposite of its price, is trading at 3.518 percent, posting a loss of 2.8 basis points on the day.

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

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