Stocks finished Thursday positive, closing near daily highs after a shaky morning. The Dow Jones Industrial Average rose 57.88 points (+0.44%), Standard & Poor's 500 index increased 6.26 points (+0.43%), and the Nasdaq lagged slightly, up 8.37 (+0.32%). Volume was fair at 2.34 billion shares, and advancers beat decliners by a ratio of about 5:3.
The day started negative as the Mortgage Bankers Association announced that homeowners beginning the foreclosure process increased to a record 0.65%. It was the third straight quarter where the record was broken. However, good news followed as Dallas Federal Reserve President Richard Fisher noted that inflation has been "increasingly well behaved," further helping the case for a rate cut in two weeks.
News from the job markets, service sector, and August retail sales also helped prop up the market. Worker productivity increased more than expected, while better-than-expected same-store sales (full story) from retailers such as Target (sales up 6.1%) and Wal-Mart (sales up 3.1%) made the case that the consumer is coping with the current conditions. Target jumped 2.4% to $63.39 and teen retailer Pacific Sunwear was up 5.2% to $14.99 on same-store numbers. The non-manufacturing ISM reading for August beat expectations by matching July's number.
Every sector besides financials finished positive. Utilities (+1.1%), Materials (+1.1%), and Industrials (+0.9%) all had solid days. Materials were greatly boosted by a +2% rally in gold, which topped $700/ounce. Crude oil traded over $77/barrel briefly, but finished up $0.57 to $76.30.
To keep markets liquid, the Fed injected a total of $31.25 billion through three repurchases. The Bank of England and the European Central Bank, announced that they had left their key interests rate unchanged. The ECB said that volatility in the financial markets had led to some uncertainty. The U.S. 10-year bond's rate increased to 4.51%.
All eyes will be on the Friday morning's job report (8:30 AM). Economists expect the U.S. added 120,000 jobs in August, compared to 92,000 in July. Wholesale trade (10:00 AM) is also expected for the month of July. The interpretation of the data will important, as investors do not want to see anything that would inhibit the Fed from easing, but do not want to see signs of recession either.
Sources: Yahoo, TheStreet.com
Commentary: A Fed Cut Is Priced-In; No Cut Will Trigger A Selloff • Strategists Hold Year-End S&P 500 Price Targets Steady
Stocks/ETFs to watch: TGT, PSUN
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