By Anora Mahmudova and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks came off their session
highs on Thursday, but the main benchmarks still closed with solid
gains.
Thursday's positive momentum was fueled by upbeat eurozone data
and better-than-expected earnings results.
Investors rushed into cyclical stocks, such as industrials and
the energy sector, and unloaded investments considered safer
havens, such as Treasurys, sending the yield on a 1-year Treasury
note up 6 basis points to 2.28%.
Strong quarterly results from components Caterpillar Inc. and 3M
sent the Dow Jones Industrial Average (DJI) higher by as much as
300 points during the session. The blue-chip index closed 216.58
points, or 1.3%, higher at 16,677.90.
Caterpillar and 3M shares, in fact, were together responsible
for one-third of the Dow's rally.
The S&P 500 (SPX) gained 23.71 points, or 1.3%, to finish at
1,950.82, with the industrial and energy sectors leading the
way.
The Nasdaq Composite (RIXF) jumped 69.95 points, or 1.6%, to
close the day at 4,452.79.
Also pushing higher were the Dow transports (DJT), which jumped
174 points, or 2.1%, to 8,786.49.
Jeffrey Kleintop, chief global investment Strategist at Charles
Schwab, credited upbeat earnings and an optimistic outlook from
Caterpillar as the day's driving forces, alongside positive
economic data from Europe and China, which alleviated recent fears
of global slowdown.
Kleintop added that, while it is possible the recent correction
has run its course, "volatility is here to stay."
"Investors will have to get used to an environment [marked by a
reduction in] Fed backing, higher volatility and a dearth of
uncorrelated assets. This calls for investors' reassessment of
their portfolios and their risk tolerance."
Early Friday, investors had welcomed manufacturing data from the
eurozone, which offered some upbeat news at a time when worries
about slowing global economic growth had been prompting investors
around the world to dump equities. But the report also suggested
manufacturers and service providers don't expect a significant
pickup in the pace of activity in the coming months.
The flash PMI index for the U.S. fell to a three-month low in
October but still indicated growth. Details in that report, though,
suggested that the economy could downshift further in the fourth
quarter.
Jobless claims for the latest week rose but remained below the
300,000 level for the sixth straight week, reflecting a low level
of layoffs pressuring the job market.
Earnings: Shares of Caterpillar (CAT) surged 5% after the
heavy-equipment maker raised its earnings outlook for the year.
Shares of Tractor Supply Co (TSCO) surged 16%, after it reported
quarterly results after the market close on Wednesday, beating
consensus estimates. The stock was raised to strong buy from
market-perform by Raymond James.
3M (MMM), reported third-quarter earnings that came in above
expectations. Shares of the maker of Post-it notes and other
industrial goods rose 4.4%.
General Motors (GM.XX) posted earnings, excluding one-time
costs, of 97 cents a share, higher than projections of 95 cents a
share. Shares of GM slipped 1.2%.
Southwest Airlines Co. (LUV) reported third-quarter adjusted
earnings that were above Wall Street's consensus estimate. Shares
initially gained but retreated by afternoon, ultimately losing
2.9%. Southwest stock has gained more than 75% since the start of
the year.
Shares of Yelp (YELP) dropped 19%. The online review site late
Wednesday posted better-than-expected third-quarter results but
issued a weak outlook. See: Millennials are migrating away from the
reviews sites Yelp and Angie's List.
After the bell, Seattle-based notables Amazon.com Inc. (AMZN)
and Microsoft Corp. (MSFT) released their financial reports, with
Amazon paying a significant price for underperforming expectations
and Microsoft rallying in the after hours.
(Read more about the day's notable stocks in Movers &
Shakers column:
http://www.marketwatch.com/story/comcast-gm-3m-visa-in-focus-thursday-2014-10-23.)
Other markets: 10-year Treasury note yield jumped 6 basis points
to 2.28%. In Asia overnight, stocks in Tokyo and Hong Kong finished
modestly lower. European stocks closed higher, with the benchmark
index rising 0.7%. Gold futures (GCZ4) fell $13 and oil prices
(CLZ4) rose.
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