By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Weekly jobless claims fall to lowest level since 2000
NEW YORK (MarketWatch) -- U.S. stocks shook off early pessimism
and turned higher in afternoon trade, sending the Dow Jones
Industrial Average up more than 160 points.
Analysts pointed to a rebound in oil prices as the driving force
behind the resurgence, as stocks have been closely tracking
crude-oil futures, lately.
WTI oil futures fell sharply earlier, but have since rebounded
to trade at about $44 a barrel.
The S&P 500 (SPX) moved higher with all nine of the 10 main
sectors trading in the green. Utilities and materials stocks were
leading the gains.
The Dow Jones Industrial Average (DJI) jumped about 150 points,
or almost 0.9%, as big gains in McDonald's Corp and Boeing Co
helped lift the index.
The tech-heavy Nasdaq Composite (RIXF) also picked up steam
after slumping for most of the day.
Ahead of the opening bell, market reaction to a
stronger-than-expected jobless claims figure was mostly muted, with
stocks dipping into the red in early trade.
"The biggest contributor to intraday volatility on Wall Street
has been oil. We saw big swings in the stock market whenever oil
prices moved sharply in either direction," said Randy Frederick,
managing director at the Schwab Center for Financial Research.
Trading on Wall Street so far this year has been nearly twice as
volatile as 2014, as evidenced by the average daily price change in
the S&P 500 in both directions -- of almost 20 points.
"Volatility doesn't always mean losses, and can spell
opportunity for traders, as more sizable moves in either direction
remain possible this week," added Frederick.
Ed Cowart, managing director and portfolio manager at Eagle
Asset Management, hypothesized that oil, which has dipped by 60%
since its 2014 peak in June, is near its bottom.
"We are not seeing a very steep contango - when investors buy
physical oil and store it, selling it at a higher price for future
delivery. Usually it's a sign that oil prices bottomed," Cowart
said.
"The steep oil drop created a lot of value in the energy space.
Large companies with solid book-to-value ratios will do well," he
added.
Meanwhile, stocks have had a rocky run over the past two
days.
Kim Caughey Forrest, investment analyst at Fort Pitt Capital
Group, commenting on today's earnings, said companies that are
missing expectations are being punished.
"Lots of companies are reporting good and okay quarterly results
but are saying that 2015 is going to be tougher than they
previously thought. The market, which always looks forward, is
adjusting," Forrest said.
McDonald's Corp. (MCD) , Dow Chemical Company (DOW) shares rose
after beating earnings estimates. Qualcomm Inc. (QCOM), Yahoo
Inc.(YHOO) and Royal Caribbean Cruises Ltd.(RCL) shares dropped
sharply after missing forecasts.
In economic news, the number of people who applied for U.S.
unemployment-insurance benefits plunged 43,000 to 265,000 in the
week that ended Jan. 24, hitting the lowest tally in 14 years,
according to Labor Department data released Thursday. The decline
-- the biggest since November 2012 -- was much larger than
expected.
Separately, pending home sales cooled in December, which the
National Association of Realtors attributed to fewer homes
available for sale and a slight rise in prices. The pending home
sales index fell 3.7% during December, though the year-on-year gain
was 11.7%, the highest since June 2013.
Corporate moves: McDonald's (MCD) gained after the fast-food
giant announced that President and CEO Don Thompson will retire
March 1, and Chief Brand Officer Steve Easterbrook will take his
place.
Alibaba (BABA) shares dove after worse-than-expected sales
gains.
Ford(F) shares initially rose after the automaker posted
results, but was recently trading lower.
Shares of Facebook (FB) were unchanged after the
social-networking company on Wednesday reported results that were
slightly above consensus.
Qualcomm Inc.(QCOM) shares skidded on an outlook-cut from the
chip maker.
Amazon.com Inc.(AMZN) and Google Inc.(GOOG) are coming after the
close.
For more on today's notable movers, read our regular Movers
& Shakers column.
Overseas markets: European stocks came under moderate pressure
-- the oil and gas group in particular. Shares of Royal Dutch Shell
PLC (RDSA) (RDSB) fell 4% after the company said it plans to cut
capital expenditure by about $15 billion over the next three
years.
Oil prices (CLH5) were flat after nearing six-year lows, while
gold (GCG5) prices fell more than 1% to $1,268.40 an ounce. The
dollar (DXY) drifted lower. In Asia, the Nikkei 225 retreated on
earnings and Fed rate-hike worries.
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