With traders reacting positively to a slew of U.S. economic data, stocks showed a strong move to the upside during trading on Thursday. The major averages all moved notably higher after ending Wednesday's trading narrowly mixed.
The major averages pulled back off their highs of the session going into the close but remained firmly in positive territory. The Dow jumped 331.58 points or 1.0 percent to 34,907.11, the Nasdaq climbed 112.47 points or 0.8 percent to 13,926.05 and the S&P 500 advanced 37.66 points or 0.8 percent to 4,505.10.
The strength on Wall Street partly reflected a positive reaction to a slew of U.S. economic data, including a Commerce Department report showing retail sales in the U.S. increased by much more than expected in the month of August.
The Commerce Department said retail sales climbed by 0.6 percent in August after rising by a downwardly revised 0.5 percent in July.
Economists had expected retail sales to inch up by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.
The bigger than expected increase in retail sales was largely due to higher gas prices, however, as sales rose by just 0.2 percent excluding sales by gas stations.
A separate report released by the Labor Department showed producer prices in the U.S. increased by more than expected in month of August.
The Labor Department said its producer price index for final demand advanced by 0.7 percent in August after climbing by an upwardly revised 0.4 percent in July.
Economists had expected producer prices to rise by 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.
The report also said the annual rate of producer price growth doubled to 1.6 percent in August from 0.8 percent in July. The annual rate of growth was expected to accelerate to 1.2 percent.
Nonetheless, the data does not seem to have raised concerns about inflation, as the increase in producer prices was largely due to a spike in energy prices.
"Wall Street seems content with the risk of one more Fed rate hike as consumer resilience is expected to gradually weaken," said Edward Moya, senior market analyst at OANDA.
A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits edged up by less than expected in the week ended September 9th.
Steel stocks saw substantial strength on the day amid news of additional Chinese stimulus, resulting in a 3.1 percent spike by the NYSE Arca Steel Index.
Significant strength was also visible among banking stocks, as reflected by the 1.9 percent gain posted by the KBW Bank Index.
A sharp increase by the price of crude oil also contributed to significant strength among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index jumping by 1.9 percent and 1.3 percent, respectively.
Commercial real estate, brokerage and telecom stocks also saw considerable strength, moving higher along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged by 1.4 percent, while China's Shanghai Composite Index crept up by 0.1 percent.
The major European markets also showed strong moves to the upside following a widely anticipated interest rate hike by the ECB. While the U.K.'s FTSE 100 Index spiked by 2.0 percent, the French CAC 40 Index and the German DAX Index shot up by 1.2 percent and 1.0 percent, respectively.
In the bond market, treasuries moved lower over the course of the session after seeing early volatility. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.9 basis points at 4.288 percent.
Another batch of U.S. economic data may impact trading on Friday, with traders likely to keep an eye on reports on import and export prices, industrial production and consumer sentiment.
What about the January Barometer?
The January Barometer calls for a positive year-end outcome, but a lot can happen between now and then. Please check with previous editions discussing the calculation of the Barometer.
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