Stocks see mild gains following better than expected economic data. The Dow ($INDU) added 52.43 points to close the session at 12,866.78. The S&P 500 ($SPX) tacked on 5.11 points, closing at 1,397.68. The NASDAQ ($COMPQ) gained 12.75 points to 2,451.24. Volume was light once again Thursday with 1.21 billion shares traded on the NYSE and 2.06 billion shares exchanged on the Naz. Market breadth was positive by a 18-to-13 and 15-to-13 margin on the Big Board and Naz respectively.

Data showing that retailers during April saw mostly better than expected same-store sales results helped the bulls cause. Wal-Mart (WMT) announced that same-store sales rose by 3.2 percent during the month surpassing even its own forecasts. This helped push WMT shares higher by 0.58 percent to $57.16. Target (TGT) wasn’t as bullish reporting growth of 3.1 percent, leaving the stock down 2.1 percent. Overall, the ICSC stated that same-store sales rose 3.6 percent in April, its strongest month of the year. The S&P Retail Index ($RLX) fell 1.86 percent, however, with traders not pleased with the strength of sales when adjustments are made for an early Easter holiday.

In economic news, jobless claims fell by 18,000, but remained elevated at 365,000. The four-week moving average is also high at a level of 367,000. This points to continued softness in the jobs market, but April’s better than expected nonfarm payrolls data did ease concerns about a deep recession. The European Central Bank [ECB] and Bank of England [BOE] both decided to keep rates unchanged, which was mostly expected by analysts.

In earnings news, Toyota (TM) announced that profits fell by 28 percent due to a weak dollar and difficult U.S. economy. This news pushed TM shares lower by 4.0 percent. TM is the world’s largest automaker, but isn’t immune from a slowdown in consumer spending in the U.S.  

The economy is trying to find a bottom, but the fact energy prices remain elevated is not helping. Crude closed at another record high Thursday at $123.69 a barrel, a gain of 16-cents. The problem is that high energy prices are creating problems for consumers due to the extra money needed to pay for fuel. The economy also suffers because it costs more to move goods and services.

After failing to break through resistance at its 200-day moving average, the Dow has now settled back into its trading range. Though we could see day to day volatility, it might be difficult for the major market indices to break out until some sort of catalyst appears.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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