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Stocks Extend Gains Ahead Of Monthly Jobs Report - U.S. Commentary

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US Market Commentary

Stocks Extend Gains Ahead Of Monthly Jobs Report - U.S. Commentary

9/2/2010 4:30 PM ET

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(RTTNews) - Stocks extended the upside seen in the previous session on Thursday, ending notably higher ahead of Friday's landmark jobs report following the release of upbeat data on pending home sales and weekly jobless claims.

The major averages all saw steady upside in the second half of the day, eventually ending near their best levels of the session. The Dow gained 50.63 points or 0.5 percent to end at 10,320.10, the Nasdaq advanced by 23.17 points or 1.1 percent to 2,200.01 and the S&P 500 rose by 9.81 points or 0.9 percent to 1,090.10.

Boosting sentiment this morning was data from the National Association of Realtors showing a 5.2 percent increase in its pending home sales index in July. Economists had been expecting the index to come in unchanged.

The mood on Wall Street was also helped by a report from the Labor Department showing that initial jobless claims edged down to 472,000 in the week ended August 28th, below the 475,000 estimated by economists.

Continued growth in August retail sales also helped to elevate risk appetite, with Target (TGT) reporting a 1.8 percent increase same-store sales, Saks' (SKS) sales rising by 1 percent, Kohl's (KSS) seeing 4.5 percent growth and sales by wholesaler Costco (COST) jumping by 7 percent.

In other corporate news, Hewlett Packard (HPQ) beat out rival Dell Inc. (DELL) in a bidding war for electronic storage firm 3Par (PAR), offering a winning bid of $33 per share, or a total of approximately $2 billion.

Additionally, fast food giant Burger King (BKC) closed markedly higher after the firm entered an agreement to be purchased by private capital firm 3G for $24 per share or nearly $4 billion, including debt.

Sector News

Electronic storage and semiconductor stocks were among the day's best performers, with the NYSE Arca Disk Drive Index and the Philadelphia Semiconductor Index rising by 2.4 percent and 2.1 percent, respectively. With the upward moves, the indices saw a further recovery from their recent one-year closing lows.

Housing stocks also moved markedly higher on the day, with the Philadelphia Housing Sector Index posting a gain of 2 percent following the upbeat pending home sales data.

Buying interest also drove biotechnology stocks up by hefty margins on the day, resulting in a 1.7 percent advance by the NYSE Arca Biotechnology Index. Within the sector, shares of Amylin Pharmaceuticals, Inc. (AMLN) rose by 2.4 percent, ending at their best closing price in four months.

Defense, railroad, networking and healthcare provider stocks also posted substantial gains, while modest weakness among utility stocks contributed to a 0.3 percent loss by the Philadelphia Utility Sector Index.

Dow Components

Alcoa (AA) was the leading percentage gainer in the Dow, rising by 3 percent. Despite the advance, shares of the aluminum maker remained trapped in a range near a recent one-year closing low.

Home Depot (HD) also saw a strong gain, moving up by 2.6 percent on the day. The upward lifted the stock to its best closing price in two months.

Boeing (BA), Cisco (CSCO), Disney (DIS) and Hewlett Packard were among the other top gainers in the Dow, while losses by Merck (MRK), IBM Corp. (IBM) and Verizon (VZ) limited the advance by the blue chip index.

Other Markets

Overseas, stock markets in the Asia-Pacific region saw strong gains on Thursday. Japan's benchmark Nikkei 225 Index gained 1.5 percent, while Hong Kong's Hang Seng Index moved up by 1.2 percent.

Meanwhile, the major European markets ended the day little changed. The French CAC 40 Index and the U.K.'s FTSE 100 Index edged up by 0.2 percent and 0.1 percent, respectively, while the German DAX Index closed nearly flat.

In the bond markets, treasuries saw a moderately lower close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 2.628 percent, posting a gain of 4.6 basis points.

Looking Ahead

Friday, all eyes will be on the August employment report. The headline payrolls number is expected to show the loss of 120,000 jobs, while the unemployment rate is expected to inch up to 9.6 percent from 9.5 percent.

Data on service sector activity may also garner some market attention in the aftermath of the jobs report.

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