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Stocks Gain Ahead of Thanksgiving Holiday

JeeYeon Park
Wednesday, 24 Nov 2010 | 2:25 PM ET

Stocks were trading sharply higher Wednesday following a handful of reports that offered some hope that the U.S. economy was improving.

TheDow Jones Industrial Average was up more than 140 points, led by United Technologies , American Express and Boeing . Hewlett-Packard slipped.

The S&P 500 and the tech-heavy Nasdaq were also higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell near 19.

All key S&P sectors were higher, led by consumerdiscretionary, industrials and technology.

Trading volume is expected to be light ahead of Thanksgiving Day on Thursday. Stock and bond markets will be closed for the holiday and stocks will reopen for short sessions on Friday.

Stocks were hammered in the previous sessionafter North Korea fired artillery shellson an island in South Korea Tuesday, causing deaths and sparking widespread condemnation.

The situation in Korea would likely mean continued volatility for the coming days and possibly weeks, Shaun Cochran, head of research of CLSA, told CNBC.

"In our portfolios we are positioning for that increased volatility, we're not seeing this as an immediate buying opportunity," Cochran said.

But Richard Kim, head of Korean sales at Auerbach Grayson, said investors could earn trading profits of 20 percent short-term on certain Korean stocks.

In the day's earnings news, Deere was up slightly after the world's largest maker of farm equipment reported stronger-than-expected quarterly profitand forecast 2011 earnings below expectations.

Upscale jeweler Tiffany posted profit and sales that handily beat estimates and said it expects strong holiday sales.

Guess shares jumped after the apparel company reported a quarterly profit that far exceeded expectations helped by robust expansion overseas.

Other retailers also rallied ahead of the holiday shopping season including Wal-Mart , Target and Costco . This year, more big-box retailers will begin their Black Friday sales earlier than ever Friday morning, and more are starting to open on Thanksgiving Day.

Widely Held Wednesday
Checking out large cap picks, with Mike Cuggino, Permanent Portfolio Funds, and Joe Heider, Rehmann Principal.

European shares bounced back from six-week lows, although worries about debt levels in peripheral euro zone countries kept investors nervous. Ireland set out its four-year planto make 15 billion euros in savings to bring down its record deficit.

Also, Ireland is set to part nationalize one if its key financial institutions, Bank of Ireland . S&P downgraded Ireland's rating to A from AA- late Tuesday.

Asian stocks ended mostly in the red, but off earlier lows. China's indexes managed to secure strong gains.

The dollar found strength as investors sought its relative safety. Gold settled at $1,373 an ounce, following two days of gains. Newmont Mining and AngloGold were lower.

Meanwhile, oil settled at $83.86 a barrelfollowing a report from the U.S. government that crude inventories gained more than expected in the week prior.

BP shares rose slightly after the oil giant announced a "significant" natural gas discovery in Egypt's West Nile delta.

Meanwhile, Caterpillar , the U.S.-based manufacturer of earth-moving equipment, is marketing a two-year 1 billion renminbi bondto institutional investors in Hong Kong, becoming the first foreign industrial multinational to issue debt in the Chinese currency.

General Motors said it plans to invest $163 million at plants in Michigan and Ohio to add engine production for the Chevrolet Cruze, the Chevy Volt and an unnamed new small car.

Oracle was up after Germany's SAP was ordered to pay the tech giant $1.3 billion for software theft.

HP shares slipped after UBS removed its "short-term buy" rating from the computer maker.

Treasury prices tumbledafter the government auctioned $29 billion of 7-year notes, which had a yield of 2.253 percent and a bid-to-cover ratio of 2.63.

Among this morning's heavy day of economic news, the number of people applying for unemployment benefits fell sharply last weekto the lowest level since July 2008, a hopeful sign that improvement in the job market is accelerating. The Labor Department said that weekly unemployment claims dropped by 34,000 to a seasonally adjusted 407,000 in the week ending Nov. 20, while analysts expected a much smaller drop.

Meanwhile, new U.S. single-family home sales dropped unexpectedly in Octoberand prices dropped to a seven-year low, according to the Commerce Department, pointing to sustained weakness in the housing market following the end of a home-buyer tax credit.

Also on the housing front, U.S. mortgage applications rose to their highest level in more than six months last week, according to the Mortgage Bankers Association.

Homebuilders were mostly higher across the board, with Lennar , Pulte and Toll Brothers up almost 3 percent each.

New orders for U.S. manufactured goods unexpectedly fell in October to post their largest decline in nearly two years and business capital spending plans dropped, according to the Commerce Department that pointed to a slowdown in factory activity.

Consumer spending rose for a fourth straight month in October and a key inflation gauge was at a record low, according to the Commerce Department, strengthening the Fed's defense of its decision to loosen monetary policy further.

And consumer sentiment rose to its highest level since Juneon tentative signs of improved job conditions and early discounts from retailers.

On Tap This Week:

THURSDAY: Thanksgiving Holiday — All markets closed
FRIDAY: Black Friday — NYSE early close

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