US stocks manage a good recovery

Initial claims report offsets the negative effect from retail sales data

US stocks ended in the green on Thursday, 04 June, 2009. Following a strong start, retail sales data took US stocks down for some time today. But an upbeat data from the Labor department regarding the latest jobless claims data once again took stocks higher. Energy stocks ended considerably higher today.

The Dow Jones Industrial Average ended higher by 75.6 points at 8,750. The Nasdaq Composite Index, ended higher by 24 points at 1,850. S&P 500 ended higher by 11 points at 942. The Dow started the day higher by 11 points and was down by almost 30 points at one point of time.

Indices traded in the green for most part of the day end finally ended with good gains. But the retail sales data effect came back on stocks and the same once again gave up most part of their gains. But with a late session rally with help from financial, material and energy sectors, stocks managed to end in the green, that too with good gains.

Almost all retailers - Macy's, Gap and Target etc, all reported today considerable declines for May same-store sales results, which have weighed on retailers for the entire session.

The Labor Department reported on Thursday, 04 June, 2009 that the number of continuing claims for state unemployment benefits declined by 15,000 to 6.74 million for the week ended 23 May, 2009. However, the four-week average of these claims rose by 88,750 to 6.69 million, a record-high level. First-time applications for benefits fell 4,000 to 621,000 in the week ended 30 May, 2009, reaching the lowest level since early May. The four-week average of these first-time claims rose 4,000 to 631,250.

After reaching new weekly record highs since January, the number of continuing claims for state unemployment benefits has finally declined.

The report detailed that the level of initial claims is up 68% from the same period in the prior year, and the level of ongoing claims is more than double last year's level. The insured unemployment rate - the proportion of insured workers who are collecting benefits - remained at 5%.

Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work.

Crude prices rose substantially on Thursday, 04 June, 2009. Upbeat economic data on the job front from Labor Department and an increase in the price forecast of crude by Goldman Sachs took crude prices higher today. The lower dollar also played a role in crude prices firming up. On Thursday, crude-oil futures for light sweet crude for July delivery closed at $69.15/barrel (higher by $3.03 or 4.6%). Last week, crude ended higher by 7.5%.

Today Goldman Sachs increased its 2009 oil price forecast to $85 a barrel, up from $65 a barrel previously.

In the currency market on Thursday, the U.S. dollar index, a gauge of the greenback against six major currencies, continued its recent strength initially following Asian nation announcements that they didn't see an alternative to the greenback as a reserve currency. But then the dollar slipped after the European Central Bank decided to keep benchmark interest rates at 1%. The dollar had risen yesterday for first time in five sessions after data showed the European economy shrank 2.5% in the first quarter. The index lost 1% in April and 2.9% in March.

Economic news flow is expected to be slow ahead of Friday's opening bell and the nonfarm payroll report for May is the main one scheduled. The report is scheduled to hit news wires at 8:30 AM ET tomorrow.