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Stocks rallied Thursday, logging the highest close since November, despite a late-afternoon pullback.
The Dow maintained a strong rally until mid-afternoon following solid corporate earnings reports and a drop in the number of Americans on jobless benefits before paring gains 30 minutes before the closing bell.
The Dow Jones Industrial Average rose 83.74 points, or 0.92 percent, to close at 9154.46. The S&P 500 jumped 1.2 percent to close near the 1,000 mark and the Nasdaq added 0.84 percent to finish under 2,000.
It was the highest close for the Dow and S&P since November, and for the Nasdaq, since October.
Traders attributed the late-day drop in markets to a report from Bloomberg that GE Capital may need an additional $14.7 billion in assets "if market conditions were to deteriorate."
Markets traded higher following jobless claims numbers which rose by 25,000 last week to 584,000 but investors were encouraged as talk on the Street put the number as high as 600,000. Plus, the four week-moving average, which smooths out weekly fluctuations, fell to its lowest level since Jan. 24. And continuing claims were the lowest since April.
Despite improvements in unemployment figures, the results weren't enough to stop housing foreclosures from showing a record drop in the first half of 2009.
Major cities in California, Florida, Nevada and Arizona suffered the most from the record foreclosure spree in the first half of the year, but pain in other regions also emerged as unemployment increased, according to data from RealtyTrac. Metro areas with populations of at least 200,000 in the four states accounted for 35 of the 50 highest foreclosure rates.
Bank of America [BAC
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] shares rose 3.3 percent after CEO Ken Lewis said criticism of banks’ role in economic situation has been overdone at the National Urban League's annual conference in Chicago. He projected the economic recession will end this year but that the unemployment rate will “continue at high levels well into 2010.”
Stocks held onto their gains after the latest Treasury auction, which was met with decent demand. The Treasury auctioned $28 billion of seven-year notes at a high yield of 3.369 percent. The bid-to-cover ratio was 2.63, slightly above the recent average of 2.4.
This came after a a relatively strong auction of 2-year notes Tuesday and a somewhat weak auction of 5-year notes yesterday.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, subsided slightly to finish near 25.
Shares of General Electric [GE
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] surged 6.9 percent after Goldman Sachs upgraded the stock to "buy" from "neutral," after comments from House Finanical-Services Chairman Barney Frank, who suggested the conglomerate, and CNBC parent, may not have to break up its finance arm.
General Electric was the biggest percentage gainer on the Dow, followed by Dupont [DD
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] and Alcoa [AA
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].
Citigroup [C
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] shares fell 2.5 percent after the U.S. government took a 34 percent stake in the troubled bank. This comes after the company’s move to raise capital by putting its Smith Barney brokerage into a joint venture controlled by Morgan Stanley.
And CIT Group [CIT
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] gained 12.8 percent after the insurer secured $3 billion in credit from Barclays Bank.
Shares of PennyMac [PMT
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], which buys distressed home loans and is run by several former Countrywide Financial executives, fell 4.5 percent on their debut on the New York Stock Exchange, after the offering fell short of expectations.
In this morning's wave of earnings, ExxonMobil [XOM
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] shares fell 1 percent after the oil giant reported its profit plunged 66 percent amid the drop in oil prices. And Royal Dutch Shell said its profit dropped 70 percent.
This came after similar reports of a sharp drop in profits due to sliding oil prices from ConocoPhillips and BP earlier in the week. Still to come: Results from Chevron [CVX
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] are due out before the bell Friday.
Oil rose more than $3, settling at $66.94 a barrel. Traders have been keeping a close eye on plans by the U.S. Commodities Futures Trading Commission to implement position limits for some commodity futures after wide price swings that have raised concern over speculation.
Travelers [TRV
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] shares fell 1.6 percent after the insurer delivered its first earnings report since being added to the Dow 30. The company said its profit fell 20 percent and missed its target.
Dow Chemical [DOW
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] shares jumped 6.2 percent after posting a surprise profit and said the U.S. economy has bottomed.
A couple of positive readings on consumer-products companies: Colgate-Palmolive [CL
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] beat expectations, helped by cost-cutting measures, and backed its outlook.
So far, 75 percent of the S&P companies that have reported quarterly results have beaten expectations, according to Thomson Reuters data.
AstraZeneca [AZN
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] shares rose 1 percent after the European pharmaceuticals giant raised its full-year outlook and reported healthy earnings results. The company dodged some of the pain this year thanks to the lack of large-scale generic competition for some of its drugs in the U.S.
Motorola [MOT
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] shares jumped 9.4 percent after the cell phone maker reported a small profit, while revenue slipped just slightly and the handset maker boosted its cash reserves. Sony [SNE
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] shares surged 10 percent after the Japanese electronics company posted a smaller-than-expected earnings loss, helped by an improvement in its struggling flat TV business.
Elsewhere in tech land, Alcatel-Lucent, the world's biggest provider of fixed telecom equipment, reported a quarterly loss but said it hoped to be "moderately profitable" in 2010.
The after-the-bell list for today includes: Dow component Walt Disney [DIS
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] and MetLife [MET
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].
After the bell Wednesday were two notable reports: Software provider Symantec's [SYMC
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] missed by a penny, while Visa [V
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] beat expectations.
Still to Come:
THURSDAY: Earnings from Disney, MetLife after the bell
FRIDAY: GDP; Chicago PMI; Earnings from Chevron
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