U.S. Stocks Seeing Further Upside After Early Advance

After moving mostly higher early in the session, stocks have seen further upside over the course of the trading day on Thursday. With the upward move, the Dow has reached its best intraday level in almost two months.

Currently, the major averages are hovering near the best levels of the day. The Dow is up 269.99 points or 0.8 percent at 33,916.49, the Nasdaq is up 196.17 points or 1.6 percent at 12,125.51 and the S&P 500 is up 39.47 points or 1.0 percent at 4,131.42.

The rally on Wall Street comes following the release of a report from the Labor Department showing an unexpected decrease in U.S. producer prices in the month of March.

The Labor Department said its producer price index for final demand fell by 0.5 percent in March following a revised unchanged reading in February.

Economists had expected producer prices to come in unchanged compared to the 0.1 percent dip originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed dramatically to 2.7 percent in March from 4.9 percent in February. Economists had expected the pace of growth to slow to 3.0 percent.

Combined with yesterday’s tamer-than-expected consumer price inflation data, the report has helped ease concerns about inflation and the outlook for interest rates.

“The link between the PPI and CPI is not as clear as it once was, but persistently small increases — or, as in March, an outright decline — will eventually come through to consumers if demand slows enough to prevent companies from taking out the slack in the form of higher margins,” said Chris Low, chief economist at FHN Financial.

He added, “For a Fed already inclined to pause, this report tips the scale just a bit more in favor, especially after yesterday’s CPI failed to reveal any new inflationary problems.”

However, CME Group’s FedWatch Tool is currently still indicating a 65.9 percent chance the Fed will raise rates by a quarter point next month compared to a 34.1 percent chance rates will be left unchanged.

A separate Labor Department report showed first-time claims for U.S. unemployment benefits rose by more than expected in the week ended April 8th.

The report said initial jobless claims climbed to 239,000, an increase of 11,000 from the previous week’s unrevised level of 228,000. Economists had expected jobless claims to rise to 232,000.

Sector News

Gold stocks continue to see substantial strength on the day, driving the NYSE Arca Gold Bugs Index up by 2.7 percent to an eleven-month intraday high.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for June delivery surging $29.50 to $2,054.40 an ounce.

Significant strength also remains visible among telecom stocks, as reflected by the 1.9 percent gain being posted by the NYSE Arca North American Telecom Index. The index has reached its best intraday level in well over a month.

Biotechnology stocks are also turning in a strong performance in afternoon trading, resulting in a 1.7 percent advance by the NYSE Arca Biotechnology Index.

Software, retail and airline stocks are also seeing notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index dipped by 0.3 percent.

Meanwhile, the major European markets all moved to the upside over the course of the session. While the French CAC 40 Index jumped by 1.1 percent, the U.K.’s FTSE 100 Index and the German DAX Index both edged up by 0.2 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 3.422 percent.

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