By Geoffrey Rogow
U.S. stocks rallied broadly Thursday afternoon, pushing the Dow
Jones Industrial Average back near the 10000 level after a drop in
weekly jobless claims and optimistic comments about the economy
from Cisco Systems' chief executive.
The Dow (DJI) was recently up 172 points, or 1.8%, at 9,975,
with all 30 of its components trading higher. After pushing above
10,000 for the first time in a year in mid-October, the index faced
some selling pressure to close out the month.
As the calendar has turned to November, however, some of the
buying has returned, and the Dow was up in two of the last three
sessions coming into Thursday.
The Standard & Poor's 500 Index (SPX) gained 1.5% to 1,062,
including more than 2% gains for technology and consumer
discretionary shares. Consumer firms were helped by a 1.8% gain in
retail sales in October.
Though that figure came in below expectations, some retailers
did report improved margins and lifted their third-quarter
guidance. Gap (GAP) was particularly strong, up 3.7%, after
forecasting a third-quarter profit above Wall Street's views.
The tech-heavy Nasdaq Composite Index (RIXF) rose 2% to 2095.
Even small caps pushed higher, as measured by a 2.1% gain for the
Russell 2000 Index (RUT), after this riskier part of the stock
market had paced much of the market's late-October weakness.
The markets drew support from Cisco (CSCO) as Chief Executive
John Chambers made upbeat remarks about the outlook for technology
spending.
In a call with analysts, Chambers said a recovery "is well
underway" and added that economic improvements were "gaining
momentum" worldwide. He predicted Cisco's year-over-year revenue
would grow in the current quarter after a year of declines.
Jack Ablin, chief investment officer at Harris Private Bank in
Chicago, said that technical factors are also working in the
market's favor Thursday, with the S&P 500 trading 13% above its
200-day moving average entering the day. But he added: "There's not
a lot of fundamental support at this point," with the jobs data due
Friday and other upcoming reports looming as potential downbeat
surprises.
Oil futures slipped just below the $80-per-barrel level, torn
between rallies in both stocks and the dollar. That pattern was
unusual, since the commodity in recent months has tended to move in
lockstep with stocks and in the opposite direction of the
dollar.
Floor trader Jeff Grossman of BRG Brokerage in New York said the
message of Thursday's action is that the dollar is the more
important factor for oil at the moment, since trades in raw
materials are conducted in terms of the U.S. currency. At times
when the dollar strengthens, it takes fewer of them to buy the same
amount of raw materials, pushing prices lower.
"The dollar rules all right now; you just have to keep an eye on
it," said Grossman. "Supply and demand could come into play down
the line, but that's not the big factor right now."
The U.S. Dollar Index recently edged up 0.1%, boosted by a gain
in the dollar's value against the Swiss franc. But the U.S.
currency's performance versus the other five denominations in the
index was lackluster.
Helping stocks ahead of Friday's heavily anticipated October
non-farm payroll report, the Labor Department reported that the
number of U.S. workers filing new claims for jobless benefits
declined more than economists expected last week, while total
claims lasting more than one week also decreased.
"The catalyst going forward is these labor market reports," said
Gerry Sparrow, president of St. Louis-based Sparrow Capital
Management. "As long as the job market comes back, we can get
valuations higher. This gives us a feeling tomorrow's report will
be good."
The jobless-claims news and sentiment about the upcoming Hyatt
Hotels initial public offering gave the market a lift, said Anthony
Conroy, head trader for equities at BNY ConvergEx.
"People are taking that as a positive clue," Conroy said. "We're
going to have these 3% and 5% swings, but the bias is still
positive."
Hyatt (HGH.XX), which was originally set to launch a $988
million deal for trading Friday, instead started trading the new
shares early Thursday. Hyatt's offering of 38 million shares priced
at $25 a share Wednesday, with the firm trading up 11% to $27.91 at
last check.
Highlighting technology gainers, Research In Motion (RIMM) rose
as much as 3.3% after a stock buyback by the maker of BlackBerry
devices.
A day after the Federal Reserve chose to keep its benchmark
interest rate unchanged and signaled rates would be low for a
significant period of time, financials pushed higher at the start.
A broad decline for the sector had kept markets under pressure in
late trading on Wednesday, though many of those late decliners were
slightly higher recently.
Following the Fed's decision, the Bank of England expanded its
quantitative easing program by 25 billion pounds, or roughly $41
billion. As expected, interest rates were kept at 0.5%. The
European Central Bank kept rates at 1%. The moves helped the dollar
slightly, which was up against the euro recently.
In a separate morning economic report, U.S. productivity was
reported to have grown during the third quarter by the biggest
amount in six years, a sign that employers continue to fire workers
to save money.
Still, traders largely viewed the two morning reports as
positive ahead of Friday's nonfarm-payrolls report.
Retailers' October sales reports also provided a lift to stocks,
with Children's Place (PLCE) and Gap (GPS) advancing after their
figures, though Kohl's (KSS) declined.