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Journalism of Courage
U.S. stocks jumped on Thursday as solid results from Cisco and mildly encouraging U.S. jobs data gave investors an excuse to scoop up shares beaten down in several days of sharp selling.
Labor Department data showed new U.S. claims for unemployment benefits dropped to a four-month low last week,a dose of good news for an economy battered by a credit-rating downgrade and a spate of soft economic data in recent weeks.
Had we seen a jump (in claims),it would have reinforced recession fears. What we’ve seen here is not anything to allay those fears,but just to set them aside temporarily,said Bucky Hellwig,senior vice president of BB&T Wealth Management in Birmingham,Alabama.
Volatility was high during the session and the market remained vulnerable to violent swings in either direction a day after each of the major U.S. stock indexes slid more than 4 percent on fears about the French banking system’s health.
While indexes showed solid gains on Thursday,the S&P 500 has fallen for 11 of the past 14 sessions,indicating the selling pressure may not yet be exhausted.
European shares ended higher after French President Nicolas Sarkozy’s office said he was to meet with German Chancellor Angela Merkel to discuss euro-zone issues.
We’re being driven by the news flow out of Europe,and until we get clarity,it’s hard to get much traction. At the same time,we’re also very oversold,said Art Hogan,managing director of Lazard Capital Markets in Boston.
When we hear of steps being taken to address the situation,the market catches a bit of a bid,but then another news story will come out and we sell off. Volatility is really the word of the week.
The Dow Jones industrial average gained 277.79 points,or 2.59 percent,to 10,997.73. The Standard & Poor’s 500 Index rose 32.69 points,or 2.92 percent,to 1,153.45. The Nasdaq Composite Index climbed 76.83 points,or 3.23 percent,to 2,457.88.
The Nasdaq benefited from strength in Cisco Systems Inc,which jumped 16 percent to $15.92 a day after it report quarterly revenue and profits that topped scaled-back expectations. The S&P information technology sector index shot up 3.5 percent.
Retailers also provided support after Kohl’s Corp climbed 8.6 percent to $48.10 after the moderate-priced department store chain’s quarterly earnings beat estimates and it raised its full-year profit view. The Morgan Stanley retail index rose 3.8 percent. US STOCKS: Futures point to flat open,more volatility
U.S. stock index futures pointed to a flat open and another session of volatility on Thursday as renewed concerns about the euro zone banking system pushed down European shares.
U.S. stocks offered some bright spots,with Cisco rising before the bell after its results topped estimates.
Both the S&P 500 and Dow industrials were down more than 4 percent in the previous session on worries about Europe,and underscoring the choppy trading,the Dow has swung in a range of more than 400 points for five straight days.
French banking shares were hammered by worries about their stability as European stocks dropped 0.5 percent on Thursday,extending the previous day’s losses. Reuters reported one bank in Asia had cut credit lines to major French lenders.
That report is the only thing it could be causing the selloff,said Peter Kenny,managing director at Knight Capital in Jersey City,New Jersey. This is not going away any time soon. Where there is smoke there is fire,and the appetite for risk,even rumored risk,is zero.
The latest U.S. economic data offered some relief. Initial jobless claims edged lower in the latest week,falling by 5,000 to 395,000 versus the forecast of 400,000. Equities pared losses after the data.
S&P 500 futures added 0.1 point and were above fair value,a formula that evaluates pricing by taking into account interest rates,dividends and time to expiration on the contract. Dow Jones industrial average futures rose 14 points and Nasdaq 100 futures added 5.5 points.
Dow component Cisco Systems Inc advanced 12 percent to $15.37 in premarket trading a day after reporting quarterly revenue and profits that topped scaled-back expectations.
News Corp rose 3.6 percent to $14.20 before the bell after it posted higher operating profit and revenues.
When we’re eventually able to return our focus to fundamentals,the good news out of Cisco and News Corp will help,said Robert Pavlik chief market strategist at Banyan Partners LLC in New York.
Corporate earnings this season have generally been strong,with a majority of companies topping Wall Street expectations for both profits and revenues,but the results have been overshadowed by concerns about huge government debt loads on both sides of the Atlantic and the U.S. economic slowdown.
Kohl’s Corp gained 2.4 percent to $45.36 premarket after the department store chain’s quarterly earnings beat expectations and it raised its full-year profit view. Sara Lee Corp fourth-quarter earnings fell from the prior year. and
Worries about French lenders triggered a selloff in European and U.S. banks on Wednesday and contributed to the sharp decline in broader equities.
