Investor attention turned away from Europe Thursday with U.S. stocks firmly in the plus column, reversing three days of losses. Those losses have called into question the Santa Claus rally many traders were hoping to get.
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The major averages were down between 3-4% for the week heading into Thursday’s trade, but a large dose of better-than-expected economic data fueled the green arrows on Wall Street.
In the week ended Dec. 10, 366,000 workers filed for first-time jobless benefits in the week, the lowest level in 3-1/2 years and a possible sign of a slowly improving labor market.
In addition, the four-week moving average of jobless claims – closely watched by economists because it smoothes out volatility – fell to its lowest level since July of 2008.
U.S. investors were also greeted by tame wholesale prices. While food and drug prices rose, the overall Producer Price Index inched up 0.3% in November, with core prices up a more tame 0.1%. Manufacturing in the Philadelphia region also improved.
As for sectors performing well, financials, airlines, and retail were leading the way.
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Morgan Stanley (MS) said it’s cutting 1,600 jobs, or 2.6% of its workforce, early next year, and the shares rose. Investors seemed to approve of the bank’s cost-cutting measures. Morgan Stanley says the job cuts will mostly be in capital-intensive units.
Dow components JPMorgan Chase (JPM) and Bank of America (BAC) were solidly higher. The gains held despite a warning from Standard & Poor’s that a key hurdle facing U.S. banks as the new year approaches include constraints on revenue growth.
Meanwhile, shares of Delta, United Continental, and Southwest rallied, as AAA predicts that nearly 92 million people will travel over the holidays, and airfare will be 21% higher than last year.
But AMR shares came under pressure. The bankrupt parent of American Airlines says it will shed jobs and reduce some flying routes. CEO Tom Horton wrote a letter to employees Thursday confirming some of the cuts the market had already expected two weeks after AMR’s Chapter 11 bankruptcy filing.
The holiday shopping season is off to a better-than-expected start. The National Retail Federation predicts sales will hit a record $469 billion in November and December.
The retail sector this year is outperforming the broader market and providing a favorable environment for an IPO. Michael Kors Holdings (KORS) went public Thursday trading on the New York Stock Exchange under the ticker KORS. The luxury apparel retailer priced shares higher than expected at $20 and they opened at $25.