The Dow Jones industrial average climbed 177.71 points, or 1.75%, to finish at 10,314.76. The broader Standard & Poor's 500 index shot up 18.47 points, or 1.62%, to 1,161.67. The Nasdaq composite index rose 19.3 points, or 0.96%, to 2,023.63.
In the energy markets, December NYMEX crude settled down $2.06 at $48.82 per barrel, after ranging between $51 and $48.75. Hedge fund and technical stop loss selling was reportedly widespread, and was largely driven by reports of record high natural gas inventories, according to economic research outfit Action Economics.
Friday's main event is the employment report. Some traders are speculating about payrolls, suggesting a "whisper number" of a 300,000 increase, says Action Economics. Others say there is talk that the number will disappoint and come in closer to 100,000, little changed from September's 96,000 gain, says Action Economics. The median estimate is a 180,000 gain, with a range of 325,000 to 110,000. Along with the headline figure, traders will want to know the extent of hurricane distortions, says Action Economics.
"The data will be crucial for determining the underlying trend in job growth and, as such, the report has important implications for both the Fed and the markets," says Action Economics.
Also in the report, the unemployment rate is expected to hold at 5.4%, hourly earnings are expected to rise 0.3%, and the workweek is expected to hold at 33.8 hours.
In economic news Thursday, third-quarter productivity growth was 1.9%, after a sharp upward revision to second-quarter growth to a 3.9% rate, from 2.5% previously. Unit labor costs rose 1.6% after a revised 1.0% pace in the second quarter (from +1.8%). The data were better than expected, especially with the upward revision to the second quarter, says Action Economics.
First-time jobless claims dropped 19,000 to 332,000 for the week ended Oct. 30, from a revised 351,000 the week before. The data are finally a little more clean following the hurricanes and holidays and suggest resumption of a healthier job market, says Action Economics. The 4-week moving average slipped to 342,000 from 343,500. Continuing claims fell 20,000 for the week ended Oct. 16.
Retailers were in the spotlight Thursday as many chains reported improved October sales. Wal-Mart Stores (WMT
) says October same-store sales rose 2.8%, meeting its reduced forecast. The large retailer projected third-quarter earnings at the high end of its estimates.
In merger news, Argosy Gaming (AGY
) agreed to be acquired by Penn National Gaming (PENN
) in a deal valued at $2.2 billion, or $47 per Argosy share.
On the earnings front, Qualcomm (QCOM
) posted fourth-quarter earnings per share of 23 cents (on a GAAP basis), vs. 18 cents a year ago, on a 28% revenue rise. The company said revenue grew less than expected because of inventory issues in the mobile phone market. It sees 23 cents to 25 cents first-quarter EPS on $1.3 billion to $1.4 billion in revenue. The shares were lower.
Electronic Data Systems (EDS
) said it has postponed releasing third-quarter EPS results pending the completion of an evaluation of asset impairment related to its Navy Marine Corps Intranet account. It also notes certain issues related to quarterly bonus plan accruals in 2003 and 2004.
) shares plunged 19% after the generic drug maker reported lower than expected third-quarter earnings per share of 16 cents, vs. 16 cents a year ago, despite a 6.7% revenue rise. It says delays in the approval and launch of certain generic products caused revenues and EPS for its generic and distribution businesses to be less than projected.
Other companies on Thursday's earnings calendar included Qwest Communications (Q
), Nvidia (NVDA
), CVS (CVS
), Devon Energy (DVN
), Hartford Financial (HIG
), and XM Satellite Radio (XMSR
Treasuries finished little changed on Thursday, as the yield on the 10-year note held at 4.07%. The lack of central bank hikes in Europe helped give an early bid to the bond market, but it was not sustained as cross-currents from oil, stocks, and President Bush's second-term agenda all bombarded the market ahead of tomorrow's payrolls data, says Action Economics. Reports of Palestinian chief Yasser Arafat's demise initially helped put a safety bid-terror premium in bonds, but oil tumbled $2 by the close on the vague assumption that the Middle East peace process could somehow be revived, says Action Economics.
European stock markets finished mixed on Thursday, after the European Central Bank left its refi rate unchanged at 2%, as expected. London's Financial Times-Stock Exchange 100 index was up 9.8 points, or 0.21%, to 4,728.3. The Bank of England's announcement today that interest rates would remain unchanged was widely expected.
Germany's DAX index rose 2.34 points, or 0.06%, to 4,041.38 after a plethora of corporate earnings and disappointing factory orders did little to generate fresh buying. With the U.S. election now out of the equation, traders have returned their focus to oil and third-quarter results, says Standard & Poor's MarketScope.
In Paris, the CAC 40 index lost 7.48 points, or 0.2%, to 3,762.45. The mood was somber, in contrast to yesterday's rally on Bush's re-election, as the markets returned to fundamentals, says Standard & Poor's MarketScope.
Asian markets finished mixed on Thursday. In Japan, the Nikkei 225 index rose 58.46 points, or 0.54%, to close at 10,946.27. Japanese exporters Toyota Motor and Honda Motor gained due to eased concerns about U.S. trade and currency policy change following the presidential election in the U.S. Shares of Furukawa Electric, Japan's No. 1 fiber optic cable maker, soared 10.8%, helped by a Nihon Keizai report revealing a massive capital spending plan by its client NTT Corp.
In Hong Kong, the Hang Seng index fell 28.58 points, or 0.21%, to close at 13,369.09.