Stocks opened higher Thursday after second-quarter GDP was revised to show growth was more robust than first thought.
Art Cashin, director of floor operations for UBS, offers up a little historical and statistical context for today in his morning note: "The Thursday before Labor Day has a rather negative history over recent years — In the last 11 years it has been down ten times," explains Cashin. "Some think that's pre-weekend clean-up since Friday is a getaway day for lots of folks looking to jumpstart the weekend. Even if you are chained to your desk, Friday's early close of the bond market limits liquidity opportunities. We'll see if today follows suit."
Second-quarter GDP was revised to show 3.3 percent growth, up from the prior estimate of 1.9 percent. Economists had expected to see 2.7 percent growth. The third and final reading will come next month.
A huge part of GDP growth came from trade, which added 3.1 percent.
"Wow!!" Robert Brusca, of Fact and Opinion Economics, said of the trade contribution. That's "a huge number," he said. "Without trade, U.S. GDP would have limped ahead by 0.2 percent."
Still, GDP is growing by 2.2 percent year-over-year, Brusca points out — "too fast for a recession."
Jobless claims dropped more than expected, falling by 10,000 to 425,000. Economists had expected a drop of just 7,000. Continuing claims rose about 2 percent to 3.423 million.
Of course, Tropical Storm Gustav, which is readying to move back to hurricane status and heading toward the Gulf Coast, continued to hover over the market.
Crude oil rose another dollar and change, pushing it to nearly $120 a barrel.
Gulf energy companies braced for Gustav's arrival. Shell Oil, which has the largest offshore operations, began shutting output Thursday, working to evacuate all of its 1,300 Gulf of Mexico workers by Saturday.
The U.S. dollar slipped against the euro after comments from European Central Bank officials indicated inflation worries persisted in the euro zone.
The U.S., Europe and Japan planned a joint intervention to rescue the dollar when it was plunging in March when Bear Stearns collapsed, the Nikkei business newspaper reported. The paper did not say whether a certain level for the dollar was envisaged.
Shares of auto makers didn't seem to be bothered by Toyota's cut its 2009 sales forecast by 7 percent due to pressure from high gas prices on demand for large vehicles. General Motors shares were expected to come under pressure.
Financials got a boost from Fannie Mae, which announced a sweeping management shake-up in an effort to come to grips with mounting credit losses and a shrinking capital base. Lehman Brothers said Fannie's capital and reserves are better than the market perceives.
Shares of both Fannie Mae and Freddie Mac continued to rally. Fannie Mae is up more than 50 percent from its intraday low of $4.40 on Friday, while Freddie Mac shares have doubled from their low of $2.50 that day.
Shares of MBIA jumped 20 percent after the bond insurer agreed to take over $184 billion of municipal bonds currently backed by FGIC, providing additional stability to bond holders and maybe helping it avoid insolvency.
In earnings news, Sears Holdings' profit fell to 50 cents a share in the second quarter from $1.15 in the second quarter of 2007, the company said in a statement.
Earnings are due out after the bell from Dell Computer .
In telecom news, Alcatel-Lucent shares may get a bump after a Wall Street Journal report that the company's short list for its next chief executive includes Mike Quigley, a longtime Alcatel manager who left the company last year.
Asian stocks see-sawed and ended mixed, while European markets were higher, led by financials.
MONDAY-THURSDAY: Democratic National Convention in Denver
THURSDAY: Jobless claims; GDP, corporate profits; natural-gas inventories; Earnings from Sears Holdings, Tiffany and Dell; Barack Obama's acceptance speech
FRIDAY: Personal income and spending; Chicago manuf. report; consumer sentiment; farm prices
WATCHERS: McCain VP announcement
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