U.S. Stocks Seeing Further Upside After Early Advance

After moving notably higher early in the session, stocks have seen further upside over the course of the trading day on Thursday. The major averages have all surged, extending the substantial rebound seen earlier in the week.

Currently, the major averages are just off their highs of the session. The Dow is up 490.73 points or 1.5 percent at 33,765.31, the Nasdaq is up 216.05 points or 1.7 percent at 13,277.52 and the S&P 500 is up 73.10 points or 1.7 percent at 4,310.96.

The extended rally on Wall Street partly reflects optimism about the outlook for interest rates following the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed left interest rates unchanged for the third time in the past four meetings, leading to optimism that the central bank is done raising interest rates.

Treasury yields moved notably lower on Wednesday and have shown another significant move to the downside today, adding to the buying interest.

The latest economic data has added to the optimism about rates, with the Labor Department releasing a report showing an unexpected uptick in first-time claims for U.S. unemployment benefits in the week ended October 28th.

The report said initial jobless claims crept up to 217,000, an increase of 5,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to come in unchanged compared to the 210,000 originally reported for the previous week.

A separate report from the Labor Department also showed an unexpected decrease in unit labor costs in the third quarter.

The Labor Department said unit labor costs fell by 0.8 percent in the third quarter after shooting up by a revised 3.2 percent in the second quarter.

Unit labor costs were expected to climb by 0.7 percent compared to the 2.2 percent increase that had been reported for the previous quarter.

“Stocks are rallying as Treasury yields plunge after another soft labor market reading,” said Edward Moya, senior market analyst at OANDA. “If Wall Street sees a soft NFP report tomorrow, you can kiss the chance of one more Fed rate hike this cycle goodbye.”

On Friday, the Labor Department is scheduled to release its closely watched report on employment in the month of October.

Economists currently expected employment to increase by 180,000 jobs in October after surging by 336,000 jobs in September. The unemployment rate is expected to remain at 3.8 percent.

Sector News

Banking stocks have moved sharply higher over the course of the session, resulting in a 3.7 percent surge by the KBW Bank Index.

Interest rate-sensitive housing and commercial real estate stocks also continue to see substantial strength, with the Philadelphia Housing Sector Index and the Dow Jones U.S. Real Estate Index spiking by 3.7 percent and 3.4 percent, respectively.

Significant strength also remains visible among steel stocks, as reflected by the 3.1 percent jump by the NYSE Arca Steel Index. The index has reached its best intraday level in a month.

Energy, airline and utilities stocks are also seeing considerable strength in afternoon trading, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while Hong Kong’s Hang Seng Index climbed by 0.8 percent.

The major European markets also turned in a strong performance on the day. While the French CAC 40 Index surged by 1.8 percent, the German DAX Index and the U.K.’s FTSE 100 Index shot up by 1.5 percent and 1.4 percent, respectively.

In the bond market, treasuries have moved sharply higher, extending the notable advance seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.5 basis points at 4.674 percent.

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