Stocks finished higher Thursday, pushing many indexes to new highs for the year. Procter & Gamble (PG) helped boost the Dow Jones Industrial average after the company said sales should improve later this year.
Positive news about the labor market also helped boost stocks. U.S. initial jobless claims fell 26,000 to 550,000 in the first week of September, while continuing claims came down more than expected from the previous week.
In other economic news, the U.S. trade deficit in July widened to $32.0 billion, more than expected, following a revised $27.5 billion deficit in June.
In a speech before Congress Thursday, Treasury Secretary Timothy Geithner testified that the strategy has shifted from economic rescue to preparing for future growth, necessitating the wind down of extraordinary financial system support, reports Action Economics. He sees gradual economic growth after the extensive damage, but says the economy is back from the brink. Geithner is also not likely to request another bailout round, and will drop that contingency from the budget. "That's positive fiscal news, along with the view that some $50 billion in TARP money will be repaid over the next year or so," says Action Economics. Geithner will be speaking again tonight at 7 pm ET in a CNBC town hall meeting format.
On Thursday, the 30-stock Dow Jones industrial average gained 80.26 points, or 0.84%, to 9,627.48 -- surpassing the previous 2009 closing high of 9,580.63 on Aug. 27. The broad Standard & Poor's 500-stock index rose 10.77 points, or 1.04%, to 1,044.14. The tech-heavy Nasdaq composite index moved up 23.63 points, or 1.15%, to 2,084.02.
Crude oil futures rose to $72.14 following the EIA inventory data which showed a 5.9 million barrel fall in crude stocks. Gold futures rose $1.90 to $997.20. As stocks rallied, the U.S. dollar index fell to fresh one-year lows. Treasury yields turned lower after Geithner's speech. The 10-year yield was at 3.342%
Among stocks on the move, airline stocks rose, with UAL Corp (UAUA) leading the way after being upgraded by JPMorgan. But analysts at JPMorgan downgraded shares of Jet Blue (JBLU).
Managed health care stocks moved higher after President Obama said in a speech Wednesday night that a health insurance plan of $900 billion over 10 years will be funded with spending cuts and tax increases.
Dow component Procter & Gamble (PG) projected organic sales growth of 1% to 4% for its fiscal second quarter ending in December, following two consecutive quarters of declines. The company believes price cuts and promotions will revive sales. The consumer products maker said it expects earnings for its first fiscal quarter to range from $0.95 to $1.00 per share, which meets the $0.97 consensus estimate.
Chip maker Texas Instruments (TXN) was down slightly, even after raising its third quarter earnings outlook.
General Motors (GM) is expected to spin off its German Opel and UK Vauxhall units to a consortium led by Magna of Canada, backed by Russian banks and automakers.
In other news, Moody's reiterated its negative outlook for U.S. banks, saying that asset-quality troubles will forcebanks to post substantial additional provisions in 2009 and 2010, making many banks unprofitable for extended periods and putting stress on capital levels. "We do not believe asset quality deterioration for the U.S. banking industry has reached its peak, and we therefore anticipate multiple quarters of losses for a large number of rated banks," Moody's said in a report.
On Friday, the preliminary September reading of the University of Michigan's Consumer Sentiment survey is expected at 67.0 from August's reading of 65.7. Despite the pull-back in sentiment in July and August, all the sentiment measures have posted a notable rebound from the lows in the fourth quarter and first quarter, says Action Economics, but "still remain in recessionary territory."