Stocks finish slightly higher Thursday on late mini rally

After trading in negative territory nearly all day, two of the three major U.S. indexes managed to push into the green in the last few minutes of trading on Thursday to close modestly higher.

Both the S&P 500 and NASDAQ finished up 0.1% while the Dow fell just short of breaking out of the red, closing with a 0.1% loss. All three indexes had been lower by about 0.5% earlier in the session. Actually, stocks were broadly if only modestly higher on the day, with up volume outpacing down volume by about a 60-40 margin in the overall market. Seven of the 10 S&P sectors finished with gains, led by utilities, which rose 0.8%. Dow components were nearly evenly split, with 15 up, 14 down and one unchanged. Small cap stocks did better than the big caps on Thursday, with both the Russell 2000 and the S&P 600 both gaining about 0.6%.

European stocks closed down across the board but also off their lows of the day. The Stoxx Europe 600, down as much as 0.6% during the day, closed with a 0.1% loss. Germany’s DAX index also closed down 0.1% after having been down as much as 0.7%. Sovereign bond yields continued to rise higher as investors took profits, with yields on Italian and Spanish government bonds rising about five basis points each on the day. Yields on those bonds have risen by about 20 bps in the case of Italy and 30 bps for Spain so far this week.

Asian stocks finished mostly lower except in Japan, where the yen dropped to its lowest level against the dollar since the 2008 financial crisis. The Nikkei 225 rose 0.8%, closing at its highest level since January, as the yen closed above 107, its lowest level since September 2008, immediately after the collapse of Lehman Brothers. The currency was trading at about 101 to the dollar only two months ago. The Shanghai composite index fell for the second day in a row, losing 0.3%, after rising the previous seven sessions. Both the Hong Kong Hang Seng index and India’s Sensex both fell 0.2%.

U.S. unemployment claims rose for the second straight week, rising by the most since the end of June. Initial claims rose by 11,000 to 315,000 last week, which included the Labor Day holiday, well above the consensus forecast of 300,000. The four-week moving average rose to 304,000, the most since mid-July. In a separate report, the U.S. Treasury said the federal deficit in August totaled $128.7 billion, in line with expectations, bringing the fiscal year-to-date shortfall through 11 months to $589.2 billion, down 22% from $755.3 billion in the comparable period in the previous fiscal year. September retail sales get released on Friday; the Street is expecting a 0.6% rise following August’s unexpected flat performance.

Reports/dates/facts/links worth paying attention to over the next week:

  1. September 12: U.S. retail sales (September); UofM/Reuters consumer sentiment report (mid-September). China industrial production (August).
  2. September 15: U.S. industrial production for August; NY Fed Empire State manufacturing index for September.
  3. September 16: German ZEW survey for September; U.S. same store sales for the latest week; U.S. PPI-FD for August.
  4. September 17: U.S. CPI for August; FOMC economic and rate forecasts; Yellen post-FOMC-meeting press conference.
  5. September 18: Scotland’s independence referendum.

Copyright © 2014 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.

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