By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rallied on Thursday,
boosted by better-than-expected data on weekly jobless claims and
as investors reconsidered their concerns about the Federal
Reserve's potential reduction in its bond-buying program.
"The market is becoming more and more comfortable with the
tapering talk," said Andrew Zimmerman, chief investment strategist
at DT Investment Partners, in a phone interview on Thursday.
The S&P 500 (SPX) was last up 12 points, or 0.7%, to 1,793,
while the Dow Jones Industrial Average (DJI) advanced 92 points, or
0.6%, to 15,993 after briefly topping the milestone level of 16,000
intraday.
The Nasdaq Composite (RIXF) gained 37 points, or 0.9%, to
3,958.
On Wednesday, stocks slumped after minutes from the last Fed
meeting showed the central bank was on track to slow its
bond-buying program that has helped power stocks to record
levels.
But the main indexes have now recouped their losses and then
some. Andrew Wilkinson, chief economic strategist at Miller Tabak
& Co., pointed out in a note Thursday that "any reduction in
the flow of purchases by the Fed inherently smacks of economic
recovery."
The market is also taking in weaker-than-expected manufacturing
data and speeches by Federal Reserve officials. The S&P 500 and
Nasdaq also are near their own milestone levels of 1,800 and 4,000,
respectively. Check out MarketWatch's live blog of Thursday's
stock-market action.
* Today's market-moving news: The Labor Department said weekly
jobless claims fell by 21,000 to 323,000, better than forecasts for
334,000. In addition, wholesale prices dropped 0.2% last month,
reflecting the lack of inflationary pressure in the U.S. economy.
On the downside, the Philadelphia Fed's index of manufacturing
conditions dropped to 6.5 in November, well below expectations, but
the market showed little reaction to that report. Among Thursday's
Fed speeches, Richmond Fed President Jeffrey Lacker reiterated his
opposition to the central bank's bond buys.
* What strategists are saying: While uber bear Marc Faber sees
asset bubbles just about everywhere, bubble talk could be a good
contrarian indicator, according to DT's Zimmerman. "I don't think
sentiment is really that bullish out there, if everybody thinks
we're in a bubble and is looking for a correction," Zimmerman told
MarketWatch on Thursday. "To us it's a contrarian indicator,
because we think stocks will continue to rally." Meanwhile, Peter
Garnry, head of equity strategy at Saxo Bank, suggested that
traders have a fear of missing out in a rally that has left the
S&P 500 up by about 25% for the year. He said in emailed
comments that a "sense is spreading that if you are not on the
bandwagon, your performance will look bad."
* 2014 predictions: Goldman Sachs sees a 67% probability of the
S&P 500 falling 10% at some point in 2014. Meanwhile,
Schaeffer's Investment Research pointed out that since 1991, the
S&P has always gained in the year that came after a 20%-plus
move for that benchmark index.
* Today's movers & shakers: Retailers have dropped in the
wake of disappointing quarterly results or outlooks. Target Corp.
was down 4% after posting weaker margins and earnings at its U.S.
business, while Dollar Tree Inc. dropped 4% after its earnings fell
in the third quarter. Read more in the Movers & Shakers
column.
* Other markets: European stocks were mostly lower, while
Chinese manufacturing activity showed a deceleration, which hit
Hong Kong stocks. Gold prices extended losses on Thursday, while
oil prices jumped above $95 a barrel. The dollar was little
changed, but Treasury prices advanced.
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