Stocks Rebound Sharply After Yesterday's Sell-Off - U.S. Commentary

(RTTNews) - Following the sell-off seen in the previous session, stocks showed a substantial move back to the upside over the course of the trading day on Thursday. The major averages climbed firmly into positive territory, partly offsetting yesterday's steep losses.

The major averages pulled back off their best levels going into the close but still ended the day sharply higher. The Dow jumped 401.13 points or 1.6 percent to 24,984.55, the Nasdaq soared 209.93 points or 3 percent to 7,318.34 and the S&P 500 surged up 49.47 points or 1.9 percent to 2,705.57.

Bargain hunting contributed to the rebound on Wall Street, with traders picking up stocks at reduced levels after the major averages ended Wednesday's trading at multi-month closing lows.

A positive reaction to earnings news from big-name companies also generated buying interest after disappointing earnings news weighed on the markets in the previous session.

Shares of Twitter (TWTR) spiked by 15.5 percent after the social media giant reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

Software giant Microsoft (MSFT) also shot up by 5.8 percent after reporting better than expected third quarter results.

Ford (F), Tesla (TSLA), and Whirlpool (WHR) are also among the well-known companies that moved significantly higher after reporting their quarterly results.

Stocks also benefited from the release of some upbeat economic data, including a report from the Commerce Department showing an unexpected increase in durable goods orders in the month of September.

The report said durable goods orders climbed by 0.8 percent in September after surging up by 4.6 percent in August. Economists had expected orders to drop by 0.9 percent.

The unexpected increase in durable goods orders was largely due to a jump in orders for transportation equipment, which shot up by 1.9 percent in September after spiking by 13.2 percent in August.

Excluding orders for transportation equipment, durable goods orders inched up by just 0.1 percent in September after rising by 0.3 percent in August. Economists had expected a 0.3 percent increase.

The National Association of Realtors also released a report showing an unexpected rebound in pending home sales in September.

NAR said its pending home sales index climbed by 0.5 percent to 104.6 in September after tumbling by 1.9 percent to a revised 104.1 in August.

The rebound came as a surprise to economists, who had been expecting pending home sales to edge down by 0.1 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Meanwhile, a separate report from the Labor Department showed a modest rebound in initial jobless claims in the week ended October 20th.

The Labor Department said initial jobless claims crept up to 215,000, an increase of 5,000 from the previous week's unrevised level of 210,000. Economists had expected jobless claims to inch up to 214,000.

Sector News

Software stocks turned in some of the market's best performances on the day following the upbeat earnings news from industry giant Microsoft.

Reflecting the strength in the software sector, the Dow Jones Software Index surged up by 4.6 percent after ending the previous session at its lowest closing level in well over three months.

Substantial strength was also visible among biotechnology stocks, as reflected by the 3.5 percent jump by the NYSE Arca Biotechnology Index. The index bounced off a more than five-month closing low.

Retail, computer hardware, housing, and steel stocks also saw significant strength on the day, reflecting broad based buying interest on Wall Street.

Meanwhile, gold stocks bucked the uptrend, with the NYSE Arca Gold Bugs Index plunging by 6.1 percent despite a modest increase by the price of the precious metal.

Utilities stocks also moved notably lower, giving back ground after being among the few groups to move to the upside on Wednesday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness during trading on Thursday. Japan's Nikkei 225 Index tumbled by 3.7 percent, while Hong Kong's Hang Seng Index slumped by 1 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index surged up by 1.6 percent, the German DAX Index jumped by 1 percent and the U.K.'s FTSE 100 Index climbed by 0.6 percent.

In the bond market, treasuries gave back ground after moving sharply higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.2 basis points to 3.136 percent.

Looking Ahead

An initial reading on third quarter GDP may attract attention on Friday along with a revised report on consumer sentiment in October.

On the earnings front, Google parent Alphabet (GOOGL), Amazon (AMZN), and Intel (INTC) are among the companies releasing their quarterly results after the close of today's trading.