Strength On Wall Street Lifts S&P 500 To New Record High - U.S. Commentary

(RTTNews) - While buying interest was somewhat subdued, stocks moved mostly higher over the course of the trading day on Thursday. The gains on the day extended the recent upward trend by the markets, lifting the S&P 500 to a new record closing high.

The major averages pulled back off their best levels going into close but still ended the day in positive territory. The Dow climbed 60.36 points or 0.4 percent to 17,039.49, the Nasdaq edged up 5.62 points or 0.1 percent to 4,532.10 and the S&P 500 rose 5.86 points or 0.3 percent to 1,992.37.

The continued strength on Wall Street was partly due to a batch of largely upbeat U.S. economic data, including a report from the National Association of Realtors showing that existing home sales unexpectedly rose to a ten-month high in July.

NAR said existing home sales climbed to a seasonally adjusted annual rate of 5.15 million in July from a downwardly revised 5.03 million in June. Economists had expected existing home sales to drop to a rate of 5.00 million.

With the unexpected increase, existing home sales rose to their highest annual rate since reaching 5.26 million in September of last year.

The Labor Department also reported a slightly bigger than expected drop in initial jobless claims in the week ended August 16th.

The report said jobless claims dropped to 298,000, a decrease of 14,000 from the previous week's revised level of 312,000. Economists had been expecting jobless claims to pull back to 300,000.

Additionally, the Philadelphia Federal Reserve said its index of regional manufacturing activity unexpectedly reached a new three-year high in August.

Recent upward momentum also continued to support the markets following the uptrend seen throughout much of the past two weeks.

The recent strength on Wall Street has seemed to defy concerns about conflicts overseas and the outlook for monetary policy.

Traders also seemed to be expressing some optimism about Federal Reserve Chair Janet Yellen's speech at the Kansas City Fed's economic policy symposium in Jackson Hole, Wyoming.

Yellen, who is scheduled to speak at 10 am ET on Friday, is expected to deliver a dovish message in her remarks about the labor market.

Sector News

While many of the major sectors ended the day showing only modest moves, significant strength was visible among banking stocks. The Dow Jones Banks Index surged up by 1.8 percent, reaching its best closing level in over a month.

Bank of America (BAC) helped lead the banking sector higher, jumping 4.1 percent following news of its nearly $17 billion settlement with the government over its mortgage lending.

Considerable strength also emerged among brokerage stocks, as reflected by the 1 percent gain posted by the NYSE Arca Broker/Dealer Index. With the gain, the index reached a six-month closing high.

Networking and computer hardware stocks also saw some strength on the day, although buying interest was somewhat subdued.

On the other hand, gold stocks showed a substantial move to the downside, dragging the NYSE Arca Gold Bugs Index down by 2 percent. The weakness in the sector came as gold for December delivery tumbled $19.80 to $1,274.50 an ounce.

Airline and biotechnology stocks also gave back some ground after moving notably higher over the past several sessions.

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 advanced by 0.9 percent, while Hong Kong's Hang Seng Index dropped by 0.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While U.K.'s FTSE Index edged up by 0.3 percent, the German DAX Index climbed by 0.9 percent and the French CAC 40 Index jumped by 1.2 percent.

In the bond market, treasuries regained some ground after drifting lower over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.9 basis points to 2.407 percent.

Looking Ahead

Yellen's remarks will be in the spotlight on Friday amid a lack of major U.S. economic data, although European Central Bank President Mario Draghi is also due to speak.