Stocks got off to a weak start on Thursday but managed to regain some momentum throughout the trading session and close out the day in green territory. Domestic equity indexes were mixed: The Dow Jones Industrial Average led the way higher with a 0.96% gain on the day, while the NASDAQ lagged behind, clinching a 0.13% gain for the day. Crude oil futures surged higher by 2%, closing the day just under $98 a barrel. Gold on the other hand tumbled lower, as investors took profits given the impressive run-up from last week. Futures prices for the precious yellow metal closed near $1,760 an ounce for the day.
Investor confidence in the U.S. economic recovery was lifted as new claims for unemployment benefits dropped to the lowest level since April of 2011, showing that labor market conditions are slowly, but steadily, improving. The U.S. trade deficit data surpassed analyst expectations as the figure narrowed by 4% in September, bolstered by record exports. Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said, “While global economic activity is slowing, it hasn’t collapsed, so the U.S. will be able to sustain healthy gains in exports. The deceleration in the pace of layoffs is positive for the outlook on consumer spending”.
The Vanguard European ETF (VGK) was one of the biggest winners on the day as Euro zone fears eased up, gaining 1.88% on the day. Investors’ confidence in the debt stricken currency bloc improved considerably after Standard & Poor’s reiterated France’s AAA credit rating and cited the nation’s stable economic outlook. Italian bonds also stabilized after the European Central Bank purchased the securities in an auction, coupled with the appointment of Lucas Papademos, former ECB vice president, as Greece’s new prime minister [see Italy ETF Slaughtered: Time To Sell?].
One of the worst performers on the day was the S&P 500 VIX Short-Term Futures ETN (VXX), which plunged 6.31% as investor confidence in the domestic economic recovery as well as the Euro zone paved the way higher for equity markets. Improving labor market conditions at home coupled with stronger-than-expected exports pushed stocks higher as the cloud of uncertainty looming over the U.S. economy appears to be shrinking. Although Euro zone debt woes are far from gone, investors got a whiff of confidence after the ECB stepped in the Italian bond markets, showing their commitment to ensure stability in the region [see Three Long/Short Ideas For Euro Zone Debt Drama].