Stocks Advance, Led by Techs; Vix Declines
Stocks added to gains Thursday, led by techs, after a handful of positive economic news and ahead of a key vote on a bill to cut the U.S. deficit in Congress.
The Dow Jones Industrial Average turned higher, after skidding nearly 200 points in the previous session.
Cisco and DuPont led the blue-chip gainers, while ExxonMobil sagged.
The S&P 500 and the tech-heavy Nasdaq also climbed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, declined near 21.
Among key S&P sectors, financials and techs led the gainers, while telecom slipped.
The debt-ceiling debate has weighed heavily on investor sentiment for most of the week ahead of the Aug. 2 deadline. House Republicans are preparing to vote on a plan to avoid a default, while the legislation faces opposition from Senate Democrats. The White House has also threatened to veto the proposal.
Weekly jobless claims declined more than expected last week, dropping below the key 400,000 level for the first time since early April, according to the Labor Department.
Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 398,000. Economists polled by Reuters had forecast claims falling to 415,000. The prior week's figure was revised up to 422,000 from the previously reported 418,000.
"If history is any gauge, the break below 400,000 will be short-lived [and] next week's revision will likely push us above this level," according to Todd Schoenberger, managing director of LandColt Trading.
"Traders realize, though, the timebomb for the markets is actually next Friday when the July nonfarm payrolls report is released. Buyer beware—proceed with caution," he added.
Meanwhile, pending sales of existing U.S. homes unexpectedly rose in Junefrom May and jumped sharply from a year ago, according to the National Association of Realtors.
The Pending Home Sales Index was up 2.4 percent to 90.9 from 88.8 in May—up 19.8 percent from a year ago. Economists polled by Reuters ahead of the report were expecting pending home sales to fall 2.0 percent.
Daniel Penrod, senior industry analyst at California Credit Union League said the economic numbers imply steady growth ahead.
“It won’t be of the big increases we saw in the past, but will be a steadier growth,” said Penrod. “It’s not fast enough to pull us through a recovery in a 12-month time period, but each time we hit these growth numbers, they build on each other.”
On the earnings front, Dow component Exxon Mobil fell after earnings rose 41 percent, but results still fell short of analyst expectations.
Royal Dutch Shell earnings shot up above expectationsas oil prices rocketed.
Rival Chevron is scheduled to report earnings Friday.
DuPont reported earnings above analyst forecasts and raised its 2011 guidance.
Meanwhile, Sprint Nextel plunged almost 20 percent after the telecom service provider
Visa edged higher after the credit-card issuer reported a profit gainon higher payment volumes on Wednesday afternoon.
Meanwhile, Credit Suisse said it would cut 2,000 jobs worldwide after its second quarter saw weak trading activity and was hurt by the strong Swiss franc. Sky News reported that rival HSBC may also announce it will cut thousands of jobs as it embarks on a cost-cutting drive.
Starbucks and Chesapeake Energy are among companies poised to post earnings after-the-bell tonight.
Techs saw a rebound thanks to a handful of robust earnings and a round of analyst upgrades after suffering a sharp selloff in the previous session.
LSI soared after the chipmaker forecast better-than-expected quarterly revenue as the firm gained market share and at least two brokerages raised their price targets. Other semiconductor firms including Texas Instruments , Micron Tech and Broadcom also climbed.
Symantec jumped after the computer security software maker beat profit estimates for the fourth consecutive quarter.
Cisco advanced after Goldman Sachs raised its rating on the tech bellwether to "buy" from "neutral."
On the IPO front, premium tea retailer Teavanaskyrocketed almost 70 percent on its first day of trading.
European stocks declined for the fourth-straight session amid mounting worries over U.S. debt ceiling talks while a raft of mixed earnings sparked fears on the outlook for company profits.
On Tap This Week:
THURSDAY: 7-yr note auction, San Francisco Fed Williams speaks, money supply; Earnings from Chesapeake Energy, MetLife, Motorola Mobility, Starbucks
FRIDAY: Employment cost index, GDP, Chicago PMI, consumer sentiment, farm prices; Earnings from Chevron, Merck
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