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A slew of better than expected economic reports helped the indices to close flat, after fresh eurozone worries weighed on the markets which opened lower. For the very first time this year, the Dow closed in the red, while the Nasdaq and the S&P 500 index registered small gains to end in the green.
The Dow showed its strength by recuperating its triple digit loss to close flat to negative. The Dow Jones Industrial average (DJIA) dropped 0.02% or 2.72 points to close at 12,415.70. The blue chip index’s biggest laggard was Boeing (NYSE:BA), which fell 1.1% to $73.53., while banking giant, Bank of America (NYSE:BAC) was the biggest gainer, increasing by 8.6%. The tech-laden Nasdaq Composite Index increased 21.50 points, or 0.81% to end at 2,669.86. The Standard & Poor 500 moved up 0.3% or 3.76 points to finish at 1,281.06, marking its highest close since Oct 28. For the S&P 500, energy sector stocks fared the worst and financial stocks emerged as clear gainers. The CBOE Volatility Index, widely considered to be the fear gauge of the market, closed below 22. Advancing stocks outshined the declining stocks by a ratio of 3:2.
Banking stocks in Europe fell after Italy’s biggest bank UniCredit’s share prices once again dropped, by 17%, after shedding 14% on Wednesday. The bank said its rights issue worth 7.5 billion euros ($9.7 billion) would be discounted further. Commerzbank and Deutsche Bank of Germany fell 4.5% and 5.6% after UniCredit’s announcement sparked off panic, since both these banks need large capital infusion. Meanwhile, a French debt auction received a lackluster response with yields shooting up, indicating that the country could lose its AAA credit rating. Meanwhile, the euro settled below the $1.28 mark for the first time since September 2010. The Italian market closed 3.7% lower after the 10 year bond yield jumped up to 7%, while Spain’s IBEX 35 declined 2.9%. Spanish banking stocks fell after the Spanish Government said the banking segment will be required to raise an additional 50 billion euro in order to deal with bad property assets.
On the economic front, the U.S. Department of Labor reported that jobless claims data came in better than expected, with initial claims dropping by 15,000 in the last week of 2011 to 372,000. The prior-week’s tally was raised by 6,000 to 387,000 from 381,000. The four-week average dropped by 3,250 to 373,250. In a separate report, the Automatic Data Processing (ADP) results came in significantly better than expected, with 325,000 private jobs created in December, almost double than the expected level of 178,000. The prior month's tally was modestly revised downwards to 204,000 from the originally reported 206,000 level. The continuing drop in jobless claims in recent weeks and yesterday’s strong ADP data provide unmistakable evidence of an improving U.S. labor market. In another report, ISM Services Index increased marginally in December to 52.6.
Moving on to sectoral stocks, banking and technology stocks were the major gainers in Thursday’s trade, Banking majors like Bank of America Corp. (NYSE:BAC) Citigroup Inc. (NYSE:C) and Morgan Stanley (NYSE:MS) advanced 8.6%, 1.2% and 2.1% respectively to close at $6.31, $28.51 and $16.28. Among tech stocks, shares of Oclaro Inc. (NASDAQ:OCLR) gained 15.7% after the optical network company’s fourth quarter revenue figures topped estimates. The company is expecting that sales for the quarter will rise to $85 million. Another tech company, LSI Corp’s (NYSE:LSI) shares rose more than 7% after an analyst from Wedbush upgraded the shares of the chip maker from neutral to outperform rating. Other technology companies to gain yesterday includes Apple (NASDAQ:AAPL), Seagate Technology (NASDAQ:STX), Oracle Corp (NASDAQ:ORCL), Dell Inc (NASDAQ:DELL) and Microsoft (NASDAQ:MSFT) which increased by 1.1%, 6.4%, 2.2%, 1% and 1.02% to close at $418.03, $17.90, $26.59, $15.17 and $27.68 respectively.