Thursday Wrap - Dow +1.3%, S&P +1.5%, Nas +1.6%

 |  Includes: DIA, QQQ, SPY
by: Roy Mehta

Stocks continued their rally Thursday as the White House introduced a plan to create some relief for subprime borrowers. The Dow Jones Industrial Average climbed 174.9 points (+1.3%), Standard & Poor's 500 index jumped 22.3 points (+1.5%), and the Nasdaq gained 42.6 points (+1.6%). Volume on the NYSE was slightly lighter than the average this week at 1.17 billion shares, and advancers beat decliners by a ratio of about 7:2.

The new plan (full story) rolled out in the afternoon by the White House was received positively by the market, as the major indices finished with gaudy gains. The plan freezes some subprime loans for as many as 5 years. It will also allow consumers to refinance a new loan with a bank or move to a loan from the Federal Housing Authority. Earlier Thursday, the Mortgage Bankers Association announced foreclosures hit an all-time high in the third quarter. Also, the Labor Department revealed the four-week average for jobless claims was the highest since Katrina. Still, the new subprime plan dominated the headlines. The US 10-year Treasury note fell 13/32 in price, now yielding 4.01%.

All sectors finished ahead Thursday, with financials (+1.99%) and energies (+2.25%) recording solid gains. Crude jumped $2.74 to $90.23/barrel. Many credit and housing related stocks jumped on the news of the new plan. Countrywide (CFC, +16.1%), Freddie Mac (FRE, +7.0%), and even Toll Brothers (TOL, +13.0%), which announced its first quarterly loss in two decades (full story), enjoyed huge gains. Retailers were also in the spotlight as they announced their November sales figures (full story). WalMart (WMT, +0.76%, full story) and Costco (COST, +1.7%, full story) beat expectations, while Target (TGT, -7.6%, full story) came up short and warned it would not meet fourth quarter targets unless sales pick up.

Nonfarm Payrolls (8:30 AM) will consume the headlines Friday; Consumer Sentiment (10:00 AM) will also be announced.

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