U.S. stocks finished mostly higher Thursday ahead of Friday's quadruple witching expiration of options and futures. The Dow industrials and S&P 500 benefited from firmer-than-expected economic data, including the Philadelphia Fed index, the index of leading economic indicators, and continuing jobless claims, which provided further evidence that the U.S. recession may be near the bottom. Financial and health care stocks were notably stronger.
The Nasdaq composite index underperformed Thursday on weakness in technology shares.
On Thursday, the 30-stock Dow Jones industrial average finished higher by 58.42 points, or 0.69%, at 8,555.60. The broad S&P 500 index was higher by 7.66 points, or 0.84%, at 918.37. The tech-heavy Nasdaq composite index edged lower by 0.34 points, or 0.02%, to 1,807.72.
Treasuries plunged on the data and the U.S. Treasury's announcement of $104 billion in additional government debt coming to auction next week. The yield on the 10-year note rose to 3.83%.
The dollar index was higher. Gold futures edged lower, while oil futures were up marginally.
Treasury Secretary Timothy Geithner testified before the Senate and House panels Thursday on President Barack Obama's plan for overhauling the U.S. financial regulatory system.
Geithner's prepared remarks before the Senate Banking Committee were similar to the administration's white paper on regulatory reform issued Wednesday. Geither noted that new regulations will require that all financial firms that pose a significant risk to the financial system will be subject to strong consolidated supervision and regulation. The government is looking to establish a comprehensive supervision of financial markets, including more comprehensive regulation of all over-the-counter derivatives, and new authority for the Fed to oversee payment, clearing, and settlement systems, and will seek to increase international regulatory standards.
Investors will be keeping an eye out for Research in Motion (RIMM) results after the close.
In economic news Thursday, the Conference Board's index of leading economic indicators jumped 1.2% in May, following a 1.1% April rise. The rise was near the consensus estimate of 0.9%. The coincident and lagging indexes both dropped by 0.2%. Seven of the 10 components of the LEI rose in May, with vendor performance, the yield curve, and stock prices the biggest contributors. Three indicators were down, with the average workweek the only significant negative.
"The data show we are still in recession, but a June confirmation would suggest a summer bottom for the economy," says S&P Economics.
The Philadelphia Federal Reserve's business outlook survey rebounded to negative 2.2 in June from negative 22.6 in May. The consensus estimate was much weaker, at negative 15, The index is at its strongest level since last September, just before the financial crisis hit. The survey for six months ahead was even more positive, improving to plus 60.1 from 47.5 in May, and is at its highest level since September 2003.
"This is a much stronger reading than expected, contrasting with the Empire State report, which was disappointing," says S&P Economics.
U.S. initial jobless claims edged up 3,000 to 608,000 in the week ended June 13, from a revised 605,000 the week before (from 601,000). The 4-week moving average fell to 615,750 from 622,750 (revised from 621,750). Continuing claims declined 148,000 to 6,687,000 in the week ended June 6, from a revised 6,836,000 (was 6,816,000) for the last week of May.
The data continue to show some stabilization in the labor market, with initial claims holding well below their 674,000 record high set in the week ended Mar. 28.