Upbeat Economic Data Leads To Modest Strength On Wall Street
With
upbeat economic data generating some positive sentiment, stocks moved
higher at the start of trading on Thursday. The major averages all moved
to the upside at the open but have not seen much follow-through on the
initial upward move.
The major averages have pulled back off their highs for the young session but currently remain in positive territory. The Dow is up 36.37 points or 0.3 percent at 13,547.60, the Nasdaq is up 10.50 points or 0.3 percent at 3,128.04 and the S&P 500 is up 3.70 points or 0.3 percent at 1,476.33.
The
early strength on Wall Street comes on the heels of the release of a
pair of upbeat economic reports, including a report from the Labor
Department showing that initial jobless claims fell to a five-year low.
The report showed that jobless claims
fell to 335,000 in the week ended January 12th from the previous week's
revised figure of 372,000. With the drop, jobless claims fell to their
lowest level since the week ended January 19, 2008.
A separate report from the Commerce Department showed a much bigger than expected increase in housing starts in the month of December.
The
Commerce Department said housing starts jumped 12.1 percent to an
annual rate of 954,000 in December from the revised November estimate of
851,000. The increase lifted housing starts to their highest annual
rate since June of 2008.
While the data has generated some
positive sentiment, buying interest is somewhat subdued as traders also
digest the latest batch of earnings news.
Bank of America (BAC)
reported fourth quarter earnings that fell year-over-year but exceeded
analyst estimates, while fellow Dow component Unitedhealth (UNH)
reported fourth quarter earnings that met expectations.
Meanwhile, shares of Citigroup (C)
have come under pressure in early trading after the financial giant
reported much weaker than expected fourth quarter earnings.
Lingering
concerns about the gridlock in Washington regarding the debt ceiling
has also helped to limit the upside for the markets.
Networking stocks
have shown a strong move to the upside, however, with the NYSE Arca
Networking Index up by 1.7 percent. The gain extends a recent upward
move by the index, which has risen to a nine-month intraday high.
Housing and semiconductor stocks are also seeing significant strength, while most of the major sectors are showing more modest moves to the upside.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index inched up by 0.1 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent.
Meanwhile, the major European markets have all moved to the upside on the day. The French CAC 40 Index has surged up by 1 percent, while the German DAX Index has advanced by 0.8 percent and the U.K.'s FTSE 100 Index has risen by 0.4 percent.
In the bond market, treasuries have
come under pressure on the heels of the upbeat economic data. As a
result, the yield on the benchmark ten-year note, which moves opposite
of its price, is up by 4.2 basis points at 1.866 percent.
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TSX Flat At Open Thursday
Toronto stocks
were little changed at open Thursday amid marginal buying in energy and
base-metals stocks, with the S&P/TSX Composite Index edging up
18.68 points or 0.15 percent to 12,627.49.
The Diversified Materials Index added bout 0.50 percent, with First Quantum Minerals and Teck Resources gaining around 1 percent each.
Among gold stocks, Newcrest Mining Limited jumped 11 percent, while Agnico-Eagle Mines, Yamana Gold and Barrick Gold were losing about 2 percent each.
Fertilizer maker Agrium Inc. and Potash Corp. added around 1 percent each.
Uranium miner Denison Mines Corp. moved up 1.50 percent after it said it would acquire a portfolio of uranium exploration projects from Fission Energy Corp. in exchange of 0.355 shares of Denison for each share of Fission held
In corporate news from Canada, Sun Life Financial Inc. and Khazanah Nasional Berhad announced that they would acquire 98 percent of CIMB Aviva Assurance Berhad, a Malaysian life insurance company, and CIMB Aviva Takaful Berhad, a Malaysian takaful company, for about C$586 million.
Uranium miner Denison Mines Corp.
said it would acquire a portfolio of uranium exploration projects from
Fission Energy Corp. in exchange of 0.355 shares of Denison for each
share of Fission held.
Exploration and development company Afferro Mining
Inc. confirmed that it is in discussions with all potential offerors
from whom it has received approaches, including Jindal Steel and Power
Limited.
In economic news, Statistics Canada said Canadian
investment in foreign securities strengthened to $7.8 billion in
November, while foreign investment in Canadian securities slowed to $5.6
billion, mainly federal government debt instruments. Nevertheless, the
average monthly foreign investment in Canadian securities still stands
well above that of Canadian investment in foreign securities since 2009.
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European Stocks Mixed Ahead Of Data
European stocks
are turning in a mixed performance on Thursday as investors avoided
taking fresh positions ahead of U.S. jobless claims and housing data due
tonight and Chinese fourth-quarter GDP data scheduled for tomorrow. The
euro is holding steady after Spain saw its borrowing costs declining at
an auction of five-year government bonds.
Meanwhile, the ECB said
in its monthly bulletin that the Euro-area economy will begin a gradual
recovery later in 2013 because of the accommodative monetary policy,
together with significantly improved financial market confidence and
reduced fragmentation.
The Euro Stoxx 50 index of Eurozone
bluechip stocks is down marginally, while the Stoxx Europe 50 index,
which includes some major U.K. companies, is moving down 0.2 percent.
Around Europe, the U.K.'s FTSE 100 is little changed and the German DAX
is losing 0.4 percent, while France's CAC 40 is gaining 0.4 percent and
Switzerland's SMI is up 0.6 percent.
ThyssenKrupp AG is
rallying 1.9 percent after the Wall Street Journal said steel giant
Arcelormittal SA is one of the leading contenders among those who have
floated offers to acquire the steel operations of the German industrial
conglomerate in the United States. Deutsche Telecom is posting a modest
0.1 percent gain on reports it is mulling more job cuts in Germany.
ASML Holding NV is
tumbling 4 percent after the Dutch semiconductor equipment maker said
it sees a slow start to sales in the first quarter of the new year.
Shares of Rio Tinto
are declining 1.8 percent in London after the global miner said it
expects to recognize a non-cash impairment charge of approximately $14
billion, post tax, in its 2012 full year results.
Carrefour Group
is climbing 6.4 percent in Paris after the French retailer reported a
slight increase in the fourth-quarter sales, helped by good growth in
emerging markets of Latin America and Asia.
In economic releases, a leading indicator of the Spanish economy
increased for the third successive month in November, the latest survey
by the Conference Board showed, indicating the pace of contraction in
the Spanish economy may ease in the near term. The leading economic
index increased 0.5 percent to 103.7 in November from the previous
month.
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Asian Stocks Mixed Ahead Of Chinese GDP Data
Asian stocks
turned in a mixed performance before Chinese fourth-quarter GDP data
due tomorrow and the Bank of Japan's policy meeting next week. Upbeat
U.S. bank earnings reports lifted risk sentiment, but gains were
tempered by concerns over the global economic outlook and lingering
worries over the ongoing debate in Washington on raising the debt limit
ceiling.
Tokyo stocks reversed early losses to end
marginally higher in line with the volatility in the yen, which turned
bearish late in the session after the nation's economy minister
reportedly said his recent comments on the yen were misinterpreted. The Nikkei average rose 0.1 percent, while the broader Topix
index advanced 0.3 percent. Investors eagerly await the Bank of Japan's
policy meeting next week to see if it can push through bold monetary
policy.
Exporters such as Toyota Motor, Honda Motor and
Fanuc rose 1-2 percent, Isuzu Motors and Hino Motors rose modestly on
brokerage upgrades, telecom provider Softbank added 2.1 percent and drug
makers such as Takeda Pharmaceutical and Shionogi & Co. gained about 2 percent each. Sharp soared 7.3 percent on reports it is in talks to sell its Chinese TV plant to PC maker Lenovo. Sony rallied 5.7 percent following a Goldman Sachs upgrade.
Construction and engineering stocks led the decliners, hurt by the hostage crisis involving Japanese workers in Algeria. JGC Corp.
lost 2 percent, Taisei tumbled 3.8 percent and Kajima plunged 4.1
percent. Battery maker GS Yuasa plummeted 5 percent after one of the
Dreamliner passenger jets made an emergency landing.
Shares in Hong Kong ended marginally lower, while China's Shanghai Composite index fell 1.1 percent on profit taking after stocks reached 7-1/2 month highs earlier this week. Friday's gross domestic product data will provide more clues on the health of the world's second-largest economy.
Australian shares gained ground after soft jobs data suggested there is scope for further interest rate cuts in 2013. The benchmark S&P/ASX 200 index rose 0.4 percent to a 20-month high. Australia's seasonally adjusted jobless rate jumped to 5.4 percent in December, the Australian Bureau of Statistics reported, confirming economists' fears the economy is slowing. Banks led the market higher, with Commonwealth, Westpac, NAB and ANZ rising between 0.3 percent and 0.8 percent.
Global miner Rio Tinto
fell 1.5 percent and smaller rival Fortescue Metals Group tumbled 4.2
percent after iron ore prices extended declines, suffering their biggest
one-day decline in 11 months. BHP Billiton bucked the downward trend to
end 0.3 percent higher. Energy stocks closed higher, with Santos
closing up 0.7 percent after the company reported a significant rise in
both production and revenue in calendar 2012.
Seoul shares edged lower as foreign funds continued to dump shares on global growth concerns and amid a strong local currency. The benchmark Kospi average slipped 0.2 percent. Heavyweight Samsung Electronics
fell 1.5 percent, extending losses for a third consecutive session as
investors braced for quarterly earnings results. Hanjin Heavy Industries & Construction slumped 8.1 percent on fund raising reports.
New Zealand shares rose after the ANZ-Roy Morgan NZ
consumer confidence survey for January showed consumers remain upbeat
about the general economic conditions. The consumer confidence index
rose to 118.3 in the month from 114.7 in December. The benchmark NZX-50 index
advanced 0.7 percent, with retailer Ware Group leading the gainers with
a 3.2 percent rally, while heavyweight Fletcher Building added 2.5
percent.
Among the prominent decliners, Pumpkin Patch and PGG Wrightson fell 2-3 percent. Air New Zealand
declined 1.2 percent after the carrier said it is keen to take delivery
of 10 Boeing jets despite apprehensions about the safety and
reliability of the Boeing's troubled 787 Dreamliner.
India's benchmark Sensex was moving up 0.9 percent on earnings optimism after HCL Technologies joined Infosys and TCS in
reporting strong quarterly results. Sentiment also improved after
Finance Minister P Chidambaram sought to induce consensus among States
on issues concerning the implementation of the much-delayed Goods and
Services Tax.
Elsewhere, benchmark indexes in Indonesia and Malaysia were marginally lower, while Singapore's Straits Times index was down 0.4 percent and the Taiwan Weighted average retreated 1.1 percent.
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Crude Up Near $95
The price of crude oil
was extending gains Thursday morning on supply concerns after Islamist
militants attacked an Algerian gas field and EIA revealed unexpected dip
in US crude oil inventories last week.
Light Sweet Crude Oil (WTI)
futures for February delivery, added $0.36 to $94.60 a barrel.
Yesterday, oil rose nearly 1 percent to settle at a fresh 4-month high
after a report from the EIA revealed that US crude oil inventories
unexpectedly dipped last week.
Wednesday during market hours, the
the EIA revealed that U.S. crude oil inventories unexpectedly dipped by
1 million barrels, while gasoline stocks were up 1.90 million barrels
in the weekended January 11. Analysts expected crude oil inventories to
gain by 2.10 million barrels and gasoline stocks to add 2.3 million
barrels last week.
The price of gold was little changed Thursday morning as the US dollar was mixed ahead of today's macroeconomic data.
Gold for
February delivery, the most actively traded contract, eased $1.00 to
$1,682.20 an ounce. Yesterday, gold settled almost flat near a
three-week high as the US dollar was mixed after the inflation data.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 1,334.42 tons from 1,336.83 tons.
This morning, the U.S. dollar
lingering around a 11-month low versus the euro and its 2-week low
against sterling. The buck was moving back towards its 30-month high
versus the yen and trading flat against the Swiss franc.
In economic news, euro area construction
fell further in November, data released by Eurostat, the statistical
office of the European Union, showed. Construction output declined a
seasonally adjusted 4.7 percent year-on-year in November, after falling a
revised 3.3 percent in October. Building construction fell 5.3 percent,
while civil engineering output declined by 3.3 percent.
Traders
will look to the weekly jobless claims data from the U.S. Labor
Department, due out at 8.30 a.m ET. Economists estimate claims of
368,000, down from 371,000 in the previous week.
Simultaneously, the Commerce Department
will release its housing starts report for December. Economists
estimate housing starts to come in at an annual rate of 887,000 compared
to 861,000 in the previous month. Building permits are expected at
910,000, up from 899,000 in November.
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