U.S. Stocks Recover From Early Weakness To Close Mostly Higher

After coming under pressure early in the session, stocks showed a notable turnaround over the course of the trading day on Thursday. The major averages climbed well off their worst levels of the day and into positive territory.

The major averages all closed higher on the day, although the Dow inched up just 2.57 points or less than a tenth of a percent to 33,485.29. The Nasdaq advanced 91.09 points or 0.8 percent to 12,087.96 and the S&P 500 rose 14.64 points or 0.4 percent to 4,105.02.

For the holiday-shortened week, the Dow climbed by 0.6 percent, while the S&P 500 edged down by 0.1 percent and the tech-heavy Nasdaq slumped by 1.1 percent.

The early weakness on Wall Street partly reflected lingering concerns about the economic outlook following the recent release of some disappointing data.

The Labor Department released a report this morning showing a drop in initial jobless claims in the week ended April 1st, although the decrease came from a notably upwardly revised level.

The Labor Department said initial jobless claims fell to 228,000, a decrease of 18,000 from the previous week’s revised level of 246,000.

Economists had expected initial jobless claims to inch up to 200,000 from the 198,000 originally reported for the previous week.

The Labor Department noted that beginning with the latest data, the methodology used to seasonally adjust the national initial claims and continued claims reflects a change in the estimation of the models.

Matthew Martin, U.S. Economist at Oxford Economics said the updated seasonal adjustment factors led to upwards revisions to the claims data over most of the last five years.

“The last 10 weeks saw on average 30k upward revision to claims, pointing to a labor market that’s less tight than previously estimated,” Martin added.

Selling pressure waned shortly after the start of trading, however, as traders seem reluctant to make significant moves ahead of the release of the Labor Department’s more closely watched employment report on Friday.

Economists currently expect the report to show employment increased by 240,000 jobs in March after climbing by 311,000 jobs in February. The unemployment rate is expected to hold at 3.6 percent.

The data could impact the outlook for interest rates and the economy, although traders will have to wait to react to the report, as the U.S. stock markets will be closed for Good Friday.

Sector News

Software stocks showed a significant move to the upside over the course of the session, driving the Dow Jones U.S. Software Index up by 1.5 percent.

Considerable strength was also visible among biotechnology stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Biotechnology Index.

Banking stocks also saw notable strength on the day, while energy stocks came under pressure despite an uptick by the price of crude oil.

While crude for May delivery inched up $0.09 to $80.70 a barrel, the Philadelphia Oil Service Index and the NYSE Arca Oil Index fell by 1.4 percent and 1.3 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday. Japan’s Nikkei 225 Index tumbled by 1.2 percent and South Korea’s Kospi dove by 1.4 percent, while Indian stocks saw modest strength after the central bank unexpectedly left interest rates unchanged.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1.0 percent, the German DAX Index climbed by 0.5 percent and the French CAC 40 Index inched up by 0.1 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 3.288 percent.

Looking Ahead

Following the long Easter weekend, reaction to Friday’s monthly jobs report is likely to drive trading early next week.

Consumer and producer price inflation data is likely to be in focus later in the week along with reports on retail sales and industrial production as well as the minutes of the latest Federal Reserve meeting.

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