Dow stages big rally, but watch out for what's next
The blue chips jump 181 after reports on jobless claims and retail sales cheer investors. Friday brings reports on consumer confidence and options expirations.
If you're a bull, you had to love Thursday's stock market.
The Dow Jones industrials ($INDU) jumped 181 points, recovering more than 70% of its losses from Monday, Tuesday and Wednesday.
As important: The Standard & Poor's 500 Index ($INX) didn't come close to testing 1,600, a very important support level, and buyers are coming into the market when it hits its 50-day moving average, a key indicator of investor confidence. Meaning: Attacks on stocks that may come over the summer will run into stiff resistance.
But Friday has the potential to offer some gyrations. A lot of options expire, and stocks may move wildly as a result, particularly at the close. In addition, many traders (of their computers) will be getting ready for next week's big Federal Reserve meeting.
The Dow ended the day at 15,176, a 1.2% gain and its first gain after three straight losses. The S&P 500 added 24 points to 1,636, and the Nasdaq Composite Index ($COMPX) rose 45 points to 3,445.
Well and good, but the market is experiencing a wave of volatility it hasn't seen in about a year. Starting on May 28, when the Dow jumped 106 points to a record close of 15,409, the blue chips have moved up or down 100 points a day in nine of 13 sessions.
There were two catalysts to help Thursday's market: a decline in initial jobless claims for the latest week and a chipper report on retail sales in May, pushed along by strong auto sales.
Plus interest rates fell; the 10-year Treasury yield dropped to 2.174% from Wednesday's 2.23%.
All of that news offset a horrible day in Japan: The Nikkei 225 Index ($JP:N225) fell 844 points on Thursday, ending the day down more than 21% since peaking on May 22. That's bear-market territory. The index had been up as much as 50% before the sell-off began.
But the index rebounded on Friday, rising 241 points to 12,687. But there was a bit of a downside: The index had been up more than 455 points at 2:20 p.m. Tokyo time before heavy profit-taking set in.
In addition to the option expirations and Fed worries, the market will face the monthly Produce Price Index report, a report on industrial production and the University of Michigan's second read on consumer confidence in June.
As stocks rose, gold (-GC) fell $14.20 to $1,377.80 an ounce. Platinum (-PL) fell harder, $35.20, or 2.4%, to $1,447.10 an ounce. Silver (-SI) dropped 21.3 cents to $21.58 an ounce. Silver is off 23.8% this quarter, 28.6% on the year.
Crude oil (-CL), however, was up 81 cents to $96.69 a barrel in New York. Brent crude was up 77 cents to $104.26 a barrel.
All 10 sectors of the S&P 500 were higher, with telecom, financial and consumer discretionary stocks the leaders. Home builders and real estate stocks were especially strong.
Twenty-eight of the 30 Dow stocks were higher. Eight stocks -- IBM (IBM), 3M (MMM), Caterpillar (CAT), Chevron (CVX), United Technologies (UTX), Exxon Mobil (XOM) Travelers Companies (TRV) and Walt Disney (DIS) contributed 109 points to the index's gain.
The only losers -- and not by much -- were Microsoft (MSFT) and DuPont (DD). (Microsoft owns and publishes Top Stocks, an MSN Money site.)
Meanwhile, 476 S&P 500 stocks were higher. Gannett (GCI) was the leader, up $6.75 to $$26.60 after agreeing to acquire broadcaster-and-newspaper publisher Belo (BLC) for $1.5 billion. The broadcast stations were the keys to the deal. Belo, which owns the Dallas Morning News, jumped $3.04 to $13.77.
And 95 Nasdaq-100 ($NDX) stocks were higher, led by Kraft Foods (KRFT) and Sears Holdings (SHLD). The index jumped 37 points to 2,963.
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An interest rate tease in The Wall Street Journal sends the market into an optimistic tizzy -- but one that doesn't end quite at the top.
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