– The major U.S. index futures are pointing to a lower opening on Friday, as European debt fears have resurfaced amid Greece’s negotiations with its private sector creditors in a bid to avoid a default. Additionally, earnings news flow from the U.S. has been mixed. Market focus now shifts to the existing home sales report due to be released shortly after the markets open, with economists widely expecting a modest increase in sales. Given the overbought levels of the market, an extension of the recent gains is unlikely unless the housing data comes in well ahead of estimates some positive headlines concerning the European sovereign debt crisis emerge.
U.S. stocks extended their gains on Thursday, helped by multiple catalysts, including strong quarterly results from Morgan Stanley (MS) and Bank of America (BAC), positive European bond auctions and a steeper than expected drop in U.S. weekly jobless claims.
The major averages saw some volatility in early trading before moving broadly higher for the rest of the session. The Dow Industrials ended up 46.24 points or 0.37 percent at 12,625 and the S&P 500 Index closed 6.46 points or 0.49 percent higher at 1,315, while the Nasdaq Composite Index was up 18.62 points or 0.67 percent at 2,788 by the close of trading.
Twenty of the thirty Dow components closed higher, with Bank of America, Caterpillar (CAT) and Alcoa (AA) leading the gains.
Financial, oil service, transportation and semiconductor stocks were among the biggest gainers of the session. On the other hand, utility and gold stocks experienced weakness.
On the economic front, initial jobless claims fell 50,000 to 352,000 in the week ended January 14th. The Labor Department reasoned that the volatility stemmed from the Martin Luther King Day holiday. The four-week moving average fell to 379,000 from 383,000 in the previous week. Continuing claims calculated with a week’s lag slipped 215,000 to 3.432 million in the week ended January 7th.
A Commerce Department report showed that housing starts fell by 4.1 percent month-over-month to a seasonally adjusted annual rate of 657,000 units in December following a 9.1 percent surge in the previous month. Multi-family starts slumped 20.4 percent and were primarily responsible for the drop, while single-family starts rose 4.4 percent. Building permits, an indicator of future housing activity, fell merely 0.1 percent to 679,000 units.
The results of the Philadelphia Federal Reserve’s manufacturing survey showed that manufacturing conditions expanded at a faster rate in January. The business conditions index based on the survey rose to 7.3 in January from a revised reading of 6.8 in December. The new orders index fell 3.8 points to 6.9 and the shipments index was down 3.4 points to 5.7, while the unfilled orders index suggested a contraction with a reading of -4.1 compared to December’s 5.1.
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