Stocks Rally, with Dow Back Above 10,000

Favorable economic data and Cisco's better than expected results boosted equities Thursday. Traders braced for Friday's October jobs report

By Will Andrews

U.S. stocks closed sharply higher Thursday, with the Dow industrials finishing the session above 10,000. The market was buoyed by positive economic reports ahead of Friday's U.S. employment data. Investors hope Friday's data will show October was a good month for the economy.

On Thursday, the 30-stock Dow Jones industrial average finished higher by 203.82 points, or 2.08%, at 10,005.96. The broad Standard & Poor's 500-stock index was up 15.88 points, or 1.52%, at 1,062.38. The tech-heavy Nasdaq composite index gained 45.40 points, or 2.21%, to 2,100.92.

On the New York Stock Exchange, 25 stocks were higher in price for every five that declined. Breadth on the Nasdaq was 21-6 positive. The technology, industrial, and basic materials sectors were showing strength Thursday.

Treasuries eased after the FOMC's decision Wednesday to leave rates unchanged at 0%-0.25% and maintain stimulus plans. The U.K. boosted its economic stimulus, while the European Central bank left rates unchanged.

The dollar index was higher. Gold futures were also higher. Crude oil futures were lower.

Traders were bracing for Friday's October nonfarm payrolls report. Economists expect the U.S. economy to have shed 173,000 jobs in October, vs. a decline of 263,000 in September. The unemployment rate is expected to tick higher to 9.9%, from 9.8%.

Better than expected economic data gave indexes a lift Thursday. Weekly initial jobless claims fell 20,000 to 512,000 for the week ended Oct. 31, while continuing claims fell 68,000 to 5,749,000. Meanwhile, third-quarter nonfarm productivity soared by a more than expected 9.5%.

Equities were also supported Thursday by Cisco Systems (CSCO) earnings release, which came in better than expected and was accompanied by a $10 billion boost to its share buyback program.

Costco Wholesale (COST) reported a 5% increase in sales in October.

The tech sector benefited from the gain in Research In Motion (RIMM) shares after the BlackBerry maker established a $1.2 billion share buyback plan.

Richard Bove, the Rochdale Securities analyst who recommended selling Lehman Brothers Holdings four months before it collapsed, said Thursday that earnings at U.S. banks will begin to recover in the second half of 2010 and triple within three years, according to a Bloomberg News report. Lenders have raised the level of cash on their balance sheets to a level where they don't face the same risks of collapse that they did a year ago, he said.

"Getting another 100 percent out of these stocks from this level is not as big a move as one might think given where they've fallen from," Bove said in a telephone interview.

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