NEW YORK (Reuters) — U.S. stocks posted
their best day of the year on Thursday after a drop in applications
for unemployment insurance boosted confidence in the economy and
Disney's results overshot expectations.
The rally came ahead of the widely-followed payrolls report for
January due Friday, which some are expecting to be affected by the
extreme weather that hit much of the United States. December's
number was a much-lower-than-expected 74,000 and an upward revision
wouldn't be a surprise.
Initial claims for state unemployment benefits declined 20,000 last
week to a seasonally adjusted 331,000. While the data has no direct
bearing on January's employment report it bodes well for the jobs
market and the overall economy.
"Investors recently have been choosing to look at the glass half
empty data and not focus on the positives," said Jack Ablin, chief
investment officer at BMO Private Bank in Chicago.
"Bad weather causes cancellations, flight problems, business
closings. I'm hoping we get an upward revision to the December
(payrolls) number tomorrow, but if we get a lousy number I'm not
going to crawl under a rock."
Recent soft data added to jitters about growth in China and a
selloff in emerging market currencies and stocks. But a near 6
percent decline on the S&P 500 from its record high last month to
the session low Wednesday was seen by some as a buying opportunity,
as earnings continue to grow.
Walt Disney <DIS.N> was the most recent bellwether to beat
expectations as its profit topped estimates, sending its shares up
5.3 percent to $75.56. Disney led gains on both the Dow industrials
and S&P 500.
According to Thomson Reuters data, of the 330 companies in the S&P
500 that have reported earnings through Thursday morning, 68.8
percent have topped Wall Street expectations, above the 63 percent
beat rate since 1994 and the 67 percent rate for the past four
quarters.
The Dow Jones industrial average <.DJI> rose 188.3 points or 1.22
percent, to 15,628.53, the S&P 500 <.SPX> gained 21.79 points or
1.24 percent, to 1,773.43 and the Nasdaq Composite <.IXIC> added
45.57 points or 1.14 percent, to 4,057.122.
It was the largest daily percentage gain for the S&P 500 and Dow
since mid-December. However, the S&P was on track for its fourth
consecutive negative week, a streak not seen since July-August of
2011.
Green Mountain Coffee Roasters <GMCR.O>, one of the most shorted
stocks on Wall Street, surged 26.2 percent to $102.10. Coca-Cola <KO.N>
bought a 10 percent stake for $1.25 billion and said it would help
launch Green Mountain's new cold drink machine.
Coke shares gained 1.1 percent to $38.03 while home beverage device
maker SodaStream International <SODA.O> rose 7.2 percent to $38.35.
The Nasdaq also received a boost from Akamai Technologies <AKAM.O>,
which soared 20.6 percent to $57.18 after forecasting
better-than-expected results.
Bucking the bullish trend, Spirit AeroSystems <SPR.N> shares fell
19.6 percent to $26.51. The major supplier of components to Boeing <BA.N>
and Airbus <AIR.PA>, reported a quarterly loss on charges tied
mainly to the Boeing 787 program.
After the closing bell, LinkedIn shares <LNKD.N> fell 8 percent
following its results and outlook.
About 6.9 billion shares traded on U.S. exchanges, below the 7.9
billion average of the past five sessions, according to data from
BATS Global Markets.
On the NYSE, advancing issues outnumbered those falling by a ratio
of more than 3 to 1. On the Nasdaq, more than nine issues rose for
every five that fell.
Other economic data showed the U.S. trade deficit widened more than
expected in December as exports fell, which could see the advance
fourth-quarter growth estimate trimmed. Nonfarm productivity rose
more than expected in the fourth quarter, but weak unit labor costs
pointed to subdued wage inflation.
(Additional reporting by Chuck
Mikolajczak; editing by Nick Zieminski)
