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Except the Nasdaq, all the benchmarks closed higher on Thursday as investor sentiment was somewhat lifted by economic reports. However, concerns about Greece’s debt situation kept gains in check. The gains made during a volatile trading session were also attributable to the technical fundamentals of quadruple witching.

The Dow Jones Industrial Average (DJIA) gained 0.5% to close at 11,961.52. The Standard & Poor 500 (S&P 500) closed at 1,267.64, after climbing 0.2%. However, the Nasdaq Composite Index failed to follow the winning path of fellow benchmarks and declined 0.3% to 2,623.70. On the New York Stock Exchange, AMEX and Nasdaq consolidated volumes were 7.78 billion shares, up from the daily average of 7.58 billion. On the NYSE, the decline-advance ratio was 1,660 to 1,355. The fear-gauge CBOE Volatility Index (VIX) soared 10% to settle at 23, its highest level since March.

The Dow’s gains on Thursday helped the index partially recoup losses incurred on Wednesday. Over the past couple of weeks, experts have opined that the S&P 500 might trade below its March low of 1,250. Yesterday, the index bounced back from an intraday low of 1,258.07, above its 200-day moving average of 1,257.88. The S&P 500 posted its third increase in four days. However, the Nasdaq could not join the party and dropped to its lowest close since March 16. The index has now fallen eight times over the past ten trading days.

Experts believe investors putting money into equities yesterday had taken up a defensive stance. They were also of the opinion that investors also chose to unwind their positions, ahead of the quadruple witching on Friday. The upcoming quadruple witching or the expiration of stock-index futures, single-stock futures, equity options and stock-index options for June, led to the change in investor sentiment. Economic reports also lifted the mood of investors as initial claims declined more than expected and home sales gained modestly.

While the job markets have been reflecting a slowdown in the economic recovery, for once data from the Labor Department suggested otherwise. According to the report: “In the week ending June 11, the advance figure for seasonally adjusted initial claims was 414,000, a decrease of 16,000 from the previous week's revised figure of 430,000. The 4-week moving average was 424,750, unchanged from the previous week's revised average of 424,750. The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending June 4, unchanged from the prior week's unrevised rate of 2.9 percent”. This data came in better than expected as the consensus for the current period expected the initial claims to decline to 424, 000.

Housing data also chipped in to drive the markets higher as data on new residential construction statistics supported bullish sentiments. The U.S. Census Bureau and the Department of Housing and Urban Development reported: “Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 612,000. This is 8.7 percent (±1.5%) above the revised April rate of 563,000 and is 5.2 percent (±2.4%) above the May 2010 estimate of 582,000”. It further reported: “Privately-owned housing starts in May were at a seasonally adjusted annual rate of 560,000. This is 3.5 percent (±12.4%)* above the revised April estimate of 541,000, but is 3.4 percent (±8.7%)* below the May 2010 rate of 580,000,” and, “Privately-owned housing completions in May were at a seasonally adjusted annual rate of 544,000. This is 0.4 percent (±14.6%)* above the revised April estimate of 542,000, but is 22.5 percent (±9.2%) below the May 2010 rate of 702,000”.

However, according to Philadelphia Federal Reserve Bank's business outlook survey, factory activity in the U.S. Mid-Atlantic region weakened in June. The report stated: “The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 3.9 in May to ‐7.7, its first negative reading since last September. The demand for manufactured goods, as measured by the current new orders index, showed a similar decline: The index fell 13 points and recorded its first negative reading since last October.”

Concerns about Greece’s debt problem continued to dampen investor sentiment. After a day of violent protests in Greece that hampered the markets yesterday, Prime Minister George Papandreou said he will reshuffle his government and seek a confidence vote.

On the sectoral front, the Financial Select Sector SPDR (XLF) was up 0.5%. Gainers for the sector include Bank of America Corporation (NYSE:(BAC - Analyst Report), The Goldman Sachs Group, Inc. (NYSE:(GS - Analyst Report), Wells Fargo & Company (NYSE:(WFC - Analyst Report), U.S. Bancorp (NYSE:(USB - Analyst Report) and American International Group, Inc. (NYSE:(AIG - Analyst Report) and they rose 1.0%, 0.9%, 0.9%, 0.9%, and 0.5%, respectively.

Meanwhile, the materials sector dipped. Among the decliners for the sector were Freeport-McMoRan Copper & Gold Inc. (NYSE:(FCX - Analyst Report), Southern Copper Corp. (NYSE:(SCCO - Snapshot Report), Potash Corp. of Saskatchewan, Inc. (NYSE:(POT - Analyst Report), Agrium Inc. (NYSE:(AGU - Analyst Report) and Alcoa, Inc. (NYSE:(AA - Analyst Report) and they dropped 1.4%, 1.0%, 3.6%, 1.9% and 1.1%, respectively.


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