US stocks register good gains

Indices pare most of their earlier gains but manage a strong end

US stocks ended with good gains on Thursday, 11 June, 2009 following a full day of strong rally. With the help of financial and energy stocks, US stocks started the day on a strong mode. Top of it, couple of encouraging economic reports helped market rally right out of the gate today. Crude prices ended substantially higher today after International Energy Agency increased the 2009 global demand forecast for oil for the first time in ten months.

The Dow Jones Industrial Average ended higher by 32 points at 8,770.02. The Nasdaq Composite Index, ended higher by 9.3 points at 1,862.08. S&P 500 ended higher by 5.7 points at 944. During session highs, Dow went up higher by more than 136 points.

Seven of the ten sectors advanced today led by utilities and energy sectors. Consumer discretionary sector posted the biggest loss.

Financial stocks provided key support today after diversified financial services stocks and regional banks moved markedly higher. Strength was witnessed in the sector amid news that Goldman Sachs raised its ratings on several regional banks.

The Labor Department in USA reported on Thursday, 11 June, 2009 that while first-time claims for state unemployment benefits have declined or been flat over the most recent four weeks of data, ongoing claims have continued to reach fresh weekly highs. The number of initial claims fell 24,000 to 601,000 in the week ended 6 June, 2009. For the week ended 30 May, continuing claims for benefits reached a new record high, rising 59,000 to 6.82 million from an upwardly revised level in the prior week.

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.

The Commerce Department in USA reported today that sales at U.S. retail stores increased 0.5% in May. But despite the report, the retail sector was the main laggard today. As per the report, sales rose for just the fourth time in the past 12 months and the first time since February. Compared with May 2008, sales are down 9.6%, reflecting the huge contraction in consumer spending as the recession tightened its grip. Compared with the first five months of 2008, sales so far this year are down 10.2%.

A separate report showed that business inventories for April declined 1.1%, which is slightly steeper than the 1% downturn that was widely expected. Meanwhile, business inventories for March were downwardly revised to show a 1.3% decline.

Oil prices ended substantially higher on Thursday, 11 June, 2009. Price rose today after International Energy Agency increased the 2009 global demand forecast for oil for the first time in ten months. Prices also rose today after energy department reported sudden draw in crude inventories for last week yesterday.

On Thursday, crude-oil futures for light sweet crude for July delivery closed at $72.68/barrel (higher by $1.35 or 1.9%). Last week, crude ended higher by 3.2%.

In a monthly report released on Thursday, the IEA, an energy advisor to 28 developed countries, increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day.

In the currency market on Thursday, the dollar reversed its earlier gains. The dollar index, which weighs the strength of dollar against the basket of six other currencies, went down 1.2%.

Among economic data for tomorrow, Import & Export Prices (May) and the University of Michigan Consumer Sentiment-Prelim. (June) are set for release shortly before 10:00ET. There are no major earnings announcements.