Stocks Finish Higher

U.S. markets recovered as investors stayed calm in the wake of the London terrorist attack

U.S. stock indexes finished up during a volatile day of trading. Stocks fell broadly at the beginning of trading after news a string of terrorist bombings in London's transportation system, but regained strength as traders went bargain-hunting. The gains partly reflected that the bombings were not as severe as initially feared, says Standard & Poor's MarketScope. Airline stocks finished lower. Oil prices fell on concerns that the attacks would cause a decline in travel and reduce demand. Treasuries and gold futures saw strong gains on safety bids. The Dow Jones industrial average rose 31.61 points, or 0.31%, to 10,302.29. The broader Standard & Poor's 500 index rose by 2.93 points, or 0.25%, to 1,197.87. The tech-heavy Nasdaq composite was up 7.01 points, or 0.34%, to 2,075.66.

Before the market opened, several simultaneous explosions went off in the subway system and on a passenger bus during rush hour in London, killing at least thirty-seven people and injuring at least 700, according to news reports. A group calling itself "The Secret Organization of Al-Qaida in Europe" claimed responsibility for the attacks, saying it was retaliation for British involvement in Iraq and Afghanistan.

But after a sharp initial drop, stocks spent the rest of the session slowly recovering. "The media did a good job presenting a fairly cool front [on the London news] which helped investors who might have otherwise been shaken decide to stay the course," says Sam Stovall, chief investment strategist for Standard & Poor's. "Investors are good students of history. They realized that market shocks don't last that long, and typically present a good buying opportunity."

August crude oil futures dropped on concerns of reduced oil demand following the London attacks and effects on supply caused by tropical storms Cindy and Dennis in the Gulf of Mexico in a day of extremely volatile trading. Oil prices settled down 55 cents at $60.73 per barrel, after ranging between $59.00 and $61.00. Prices saw a bounce upward after the weekly inventory report showed a 3.6 million barrel draw in crude supplies, but dropped back down shortly afterwards.

U.S. initial jobless claims for the week rose by 7,000 to 319,000, but the 4-week moving average dipped down to 320,500 from 324,000. This data remains supportive of what should be a strong jobs number tomorrow, says Action Economics.

The week's most closely watched economic release will be the employment report for June, due out on Friday. Economists are expecting June's non-farm payrolls to rise by about 190,000, after growing by a disappointing 78,000 in May, according to Action Economics.

Hilton Hotels (HLT ), British Airways (BAB ), and other travel and leisure stocks fell after news of the bombings in London.

In other news, several retailers announced sales figures for the month of June. CVS (CVS ) saw 6% higher same-store sales in June, and 31% higher sales. Coffee chain Starbucks (SBUX ) saw 7% higher same-store sales for June, with 20% higher total sales. May Department Stores (MAY ) saw flat same-store sales, with 21% higher total sales.

Earnings season kicked off after the close on Thursday, with aluminum producer Alcoa (AA ) reporting second-quarter earnings. The company saw earnings of 52 cents a share vs. 46 cents last year, on a 13% rise in revenue.

Consultant Accenture (ACN ) also reported earnings for the second quarter. That company saw earnings of 51 cents a share, vs. 37 cents last year. Net revenues rose by 11% to $4.08 billion.

Treasury Market

U.S. Treasury yields rebounded toward the end of trading Thursday, with the benchmark ten-year note trading at 4.06%. During the morning prices jumped as traders looked for safety bids after the London bombings. British, German and French bonds were solidly higher, and yields were lower.

World Markets

European stock markets finished down sharply, but ended up from the session lows that immediately followed the terrorist attacks in London. London's FTSE 100 index lost 71.30 points, or 1.36%, to 5,158.30.

In Germany, the DAX index fell 85.31 points, or 1.85%, to 4,530.18.

In Paris, the CAC 40 index lost 59.33 points, or 1.39%, moving to 4,220.62.

Asian markets finished lower Thursday. In Japan, the Nikkei index lost 13.39 points, or 0.12%, to 11,590.14.

In Hong Kong, the Hang Seng index fell 119.12 points, or 0.84%, to 14,030.81.

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