Stocks Finish Volatile Trading Session Mostly Higher - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction over the course of the trading day on Thursday but managed to end the session mostly higher. With the gains on the day, the major averages partly offset the steep drop seen in the previous session.

The major averages moved roughly sideways going into the close, hovering in positive territory. The Dow climbed 125.18 points or 0.8 percent to 16,069.64, the Nasdaq advanced 38.51 points or 0.9 percent to 4,506.68 and the S&P 500 rose 10.41 points or 0.6 percent to 1,893.36.

The higher close on Wall Street was partly in reaction to an increase by the price of crude oil, which climbed further off its recent lows.

After reaching a high of $34.82 a barrel in early trading, crude for March delivery gave back some ground but still rose $0.92 to $33.22 a barrel.

The increase by the price of crude oil was partly due to Russian Energy Minister Alexander Novak's claims that Saudi Arabia has proposed cutting oil production by up to 5 percent.

The markets also benefited from a positive reaction to the latest earnings news from some big-name companies.

Shares of Facebook (FB) moved sharply higher on the day after the social media giant reported fourth quarter results that exceeded analyst estimates.

Online payment service provider PayPal (PYPL) also saw notable strength after reporting better than expected fourth quarter results and announcing a $2 billion stock buyback.

Not all the earnings was upbeat, however, as shares of eBay (EBAY) came under pressure after the e-commerce company reported fourth quarter results that matched estimates but provided disappointing guidance.

Buying interest was also held in check by some disappointing U.S. economic data, including a report from the Commerce Department showing a much steeper than expected drop in durable goods orders in December.

The Commerce Department said durable goods orders plunged by 5.1 percent in December after falling by a revised 0.5 percent in November. Economists had expected orders to dip by just 0.6 percent.

Excluding a 12.4 percent decrease in orders for transportation equipment, durable goods orders still tumbled by 1.2 percent in December compared to a 0.5 percent drop in November.

A separate report from the National Association of Realtors also showed a much smaller than expected increase in pending home sales in the month of December.

On the other hand, the Labor Department released a report showing that initial jobless claims pulled back by more than expected in the week ended January 23rd.

The report said initial jobless claims fell to 278,000, a decrease of 16,000 from the previous week's revised level of 294,000. Economists had expected jobless claims to pull back to 285,000.

Sector News

A rally by energy stocks contributed to the higher close by the broader markets, with the increase by the price of crude oil generating considerable buying interest.

The NYSE Arca Natural Gas Index surged up by 3.5 percent, the NYSE Arca Oil & Gas Index jumped by 2.8 percent and the Philadelphia Oil Service Index advanced by 2 percent.

Considerable strength was also visible among internet stocks, as reflected by the 2.2 percent gain posted by the Dow Jones Internet Index. The gain by the index came after it ended the previous session at a five-month closing low.

While Facebook helped to lead the sector higher, Amazon (AMZN), Google (GOOG), and Netflix (NFLX) also posted strong gains.

Steel, utilities, railroad, and retail stocks also turned in strong performances on the day, while significant weakness was visible among biotechnology, telecom, and airline stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index dropped by 0.7 percent, while Hong Kong's Hang Seng Index climbed by 0.8 percent.

Meanwhile, the major European markets all showed notable moves to the downside on the day. While the German DAX Index plunged by 2.4 percent, the French CAC 40 Index tumbled by 1.3 percent and the U.K.'s FTSE 100 Index slumped by 1 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.6 basis points to 1.985 percent.

Looking Ahead

Trading on Friday may be impacted by a slew of U.S. economic data, including reports on fourth quarter GDP, international trade, consumer sentiment, and Chicago-area business activity.

On the earnings front, Amazon, Microsoft (MSFT), and Visa (V) are among the companies releasing their quarterly results after the close of today's trading.

American Airlines (AAL), Chevron (CVX), Honeywell (HON), MasterCard (MA), Tyco (TYC), and Xerox (XRX) are also due to report their results before the start of trading on Friday.