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Boosted by a surprise tumble in weekly jobless claims, Wall Street closed in the green for the sixth time in seven sessions on Thursday, but the enthusiasm was curbed by concerns about a possible stock sale at Deutsche Bank.
The Dow Jones Industrial Average rose 28.23 points, or 0.27%, to 10415.24, the S&P 500 gained 5.31 points, or 0.48%, to 1104.18 and the Nasdaq Composite picked up 7.33 points, or 0.33%, to 2236.20 The FOX 50 added 7.33 points, or 0.52%, to 796.30.
Even though the rally has been mostly on light volume due to the holiday-shortened weeks, stocks continue to sizzle in September amid hopes that August's double-dip worries may have been overblown. The Dow has jumped 400 points so far this month, bringing the benchmark index nearly back to the flatline on the year.
The latest gains were driven by the stronger-than-expected jobless claims report and new data showing the U.S. trade deficit took its biggest drop in 17 months thanks to solid export growth.
“There has been a pretty significant reversal in the risk trade in the marketplace,” said Craig Peckham, equities trading strategist at Jefferies & Co., citing rising oil prices and Treasury yields. “It all points to a market that is slowly but surely regaining confidence. The claims data is the latest point to support that.”
While the markets managed to close solidly higher, the Dow had been up nearly triple digits until reports emerged that Germany's Deutsche Bank (NYSE:DB) is mulling raising more than $11 billion. The news weighed on the euro and dollar-traded commodities like crude oil, as well as on other financial stocks like Barclays (NYSE:BCS).
“I think the market is speculating it has something to do with them being poorly capitalized. It’s certainly creating fears of more supply of equity,” said Nick Kalivas, vice president of MF Global Research.
Most Dow stocks ended in the green, led by Johnson & Johnson (NYSE:JNJ) and JPMorgan Chase (NYSE:JPM). The index's worst performers were Boeing (NYSE:BA) and McDonald's (NYSE:MCD), which posted August sales growth that failed to impress the markets.
The choppy day on Wall Street came after the markets closed modestly higher on Wednesday in the wake of a solid bond auction in Portugal that eased the markets' European sovereign debt concerns.
The Dow had been up nearly 100 points after the Labor Department said the number of people who filed unemployment claims last week tumbled by 27,000 to 451,000, significantly beating expectations for a drop of just 2,000 claims. Continuing claims, which are filed by those on benefits for more than a week, fell slightly to 4.48 million.
The stronger-than-expected labor report comes after the government said the U.S. lost “just” 54,000 jobs in August, soothing markets that had been bracing for a drop of more than 100,000 jobs. The sluggish pace of U.S. job growth has been one of the biggest headwinds for the slowing economic recovery because it weighs on consumer spending and hurts confidence.
At the same time, the Commerce Department said the U.S. trade deficit slumped to $42.78 billion in July, compared with forecasts for a deficit of $47 billion. It also marked the biggest drop in 17 months as exports jumped 1.8% to $153.33 billion.
However, U.S. stocks briefly turned negative after Bloomberg News reported Deutsche Bank has approached investment banks about a stock sale of $11.4 billion. While the news agency reported Deutsche Bank could use the proceeds to up its stake in Deutsche Postbank, the report bolstered concerns raised this week about the health of Europe's banking system.
The news put pressure on the euro and also weighed on commodities. After rallying earlier, crude oil closed down 42 cents barrel, or 0.56%, to $74.25. Economically-sensitive copper slid 1.63% to $3.4335. Gold lost $6.70 a troy ounce, or 0.53%, to $1,248.90.
The M&A picture continues to brighten as conglomerate 3M (NYSE:MMM) broadened its vast portfolio of products by reaching an $810 million deal to buy out patient warming products maker Arizant.
McDonald’s (NYSE:MCD) stock slid 2% after posting weaker-than-expected global same-store sales growth of 4.9% for August. Shareholders may have cooled to the stock as European same-store sales rose just 2.2%, compared with 4.6% in the U.S. and 7.8% in emerging markets.
Stemcells (NASDAQ:STEM), Geron (NASDAQ:GERN) and other stem cell research companies rallied after a U.S. appeals court OK’d a White House request for an emergency stay temporarily lifting a ban on federal funding of human embryonic stem cell research.
Apple (NASDAQ:AAPL) said it will relax some of its restrictions on its mobile app developers and open up the tech giant's app review process to make it easier for developers to be in compliance.
Adobe (NASDAQ:ADBE) soared 12% as the new Apple app rules will make it easier for third-party software developers to access Apple’s consumer base.
The U.K.'s FTSE 100 jumped 1.19% to 5494.16, France's CAC 40 gained 1.22% to 3722.15 and Germany's DAX advanced 0.93% to 6221.52
In Asia, Tokyo's Nikkei 225 rallied0.82% to 9098.39, Hong Kong's Hang Seng rose 0.37% to 21167.30 and China's Shanghai Composite lost 1.44% to 3656.35.