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CNBC News Associate
Stocks closed near their highs for the day, as strength in technology stocks combined with selected health care and financials to help Wall Street continue its improbable September rally.
Though the month is generally the worst for stocks, the market is on a five-day rally that has seen tepid but steady gains.
Thursday's move higher was propelled in part by a healthy Treasury auction that showed continued strong foreign demand for US assets.
The major indexes had been trading in a narrow range for most of the day but broke out during the final two hours of trading began.
Dow component Procter & Gamble [PG
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] rose after the consumer products maker updated its annual and first-quarter outlook and forecast a return to organic sales growth in the second quarter.
U.S. health insurers such as Cigna [CI
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] and Aetna [AET
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] climbed as analysts said President Obama's highly anticipated speech urging Congress to act on health reform revealed no "game changers." Analysts also deemed the possibility of a public plan that would seriously undermine the companies as unlikely following the speech.
"Obama's address marks the home stretch in healthcare reform; we expect a watered-down resolution this year," Leerink Swan analyst John L. Sullivan wrote in a research note. "We expect a lowest-common-denominator bill (some health insurance curbs, subsidies for some of the uninsured, no public plan) on Obama's desk in 2009. For healthcare investors, we believe a benign end to this overhang is in sight."
The sector itself was slightly higher, with the SPDR Healthcare Select [XLV
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] ETF edging up and improving with the broader market.
Elsewhere, Monsanto [MON
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] slipped after the world's biggest seed maker said its forecast for fiscal 2010 earnings were below estimates and announced plans to make deeper work force cuts than previously announced, saying it will reduce its staff by about 8 percent to cut costs.
Initial claims for unemployment insurance fell more than expected to a seasonally adjusted 550,000 from an upwardly revised 576,000 in the previous week. Analysts expected claims to drop to 560,000, according to Thomson Reuters.
The initial reaction to the 30-year bond auction was muted but picked up as trading continued.
Analysts have been bedeviled by the rise in stocks and drop in bond yields despite September's reputation as the worst for the market, and the political and economic headwinds confronting the markets.
"The market tried to fool the majority of the people the majority of the time," Mike Holland, of Holland and Co., said on CNBC. "What's going on now is something that's very reminiscent of the 1970s markets when the backdrop politically and economically was really ugly and the stocks actually did very well."
Weakness in the financial sector had been limiting gains, but the market rallied as the SPDR Financial Select [XLF Loading... ()
] ETF, which tracks the movements of larger companies in the group, turned positive.In the meantime, Chevron [CVX
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] rose after the oil giant sealed an estimated $60 billion worth of gas deals with three North Asian buyers for its massive Gorgon project in Australia, paving the way for a final investment decision in coming weeks.
Texas Instruments [TXN
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] will continue to be in the spotlight after the chip producer raised its revenue and earnings guidance in its mid-quarter update after the bell on Wednesday, expecting to ride a gradual recovery in the global semiconductor industry.
Crude oil settled near $72 a barrel, up 63 cents, following data that showed a wider-than-expected fall in crude stockpiles last week. Inventories fell 5.9 million barrels for the week ended Sept. 4, compared to the previous week, according to the EIA, greater than the 1.5-million-barrel draw expected by analysts surveyed by Reuters.
Market breadth was strongly positive, with gainers beating losers more than 3 to 1. Volume was a bit stronger than recently but still fairly weak, with just under 1.5 billion shares changing hands on the New York Stock Exchange.
STILL TO COME:
THURSDAY: Atlanta Fed Pres Lockhart Speak at 12:30 pm EDT; Fed governor Kohn participates in a panel discussion at 4:15 pm; Fed releases its latest balance sheet information at 4:30 pm.
FRIDAY: Import and Export Prices; Consumer Sentiment; Wholesale Trade; and Earnings from Campbell Soup.
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Data is a real-time snapshot *Data is delayed at least 15 minutes