Stocks May Give Back Ground After Yesterday's Rally - U.S. Commentary
(RTTNews.com) - After moving sharply higher over the course of the previous session, stocks are likely to give back some ground in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 72 points.
Profit taking is likely to contribute to an early pullback on Wall Street, as some traders look to cash in on yesterday's standout gains.
While optimism about an end to the fiscal standoff in Washington helped drive stocks higher on Wednesday, the news that the government shutdown is actually over is not likely to generate much further buying interest.
Last night, both the House and the Senate passed a bill to end the sixteen-day government shutdown and raise the debt ceiling. The bill was later signed by President Barack Obama.
The agreement will fund the government through January 15th and suspend the debt limit until February 7th, suggesting that lawmakers could be in a similar fight in just a few months.
Peter Boockvar, chief market analyst at the Lindsey Group said, "As confident as most markets participants (outside of money market managers) and CEO's were that the debt ceiling was going to be raised by the deadline, [they] should be very doubtful that the extra time bought will be used productively."
"What we've created again for markets and the overall economy is another period of confusion ahead particularly on the fiscal side," he added.
On the economic front, the Labor Department released a report showing that initial jobless claims pulled back by less than expected in the week ended October 12th after surging higher in the previous week.
The report said initial jobless claims fell to 358,000, a decrease of 15,000 from the previous week's revised figure of 373,000. Economists had expected jobless claims to drop to 335,000.
However, the Labor Department noted that the claims data continues to be distorted by a claims backlog in California that contributed to the sharp jump in the previous week.
Stocks moved sharply higher during trading on Wednesday, as news of an agreement in the Senate generated optimism that the latest fiscal crisis in Washington will finally be resolved. The gains on the day offset Tuesday's weakness and lifted the Nasdaq to a new thirteen-year high.
After showing a strong move to the upside in early trading, the major averages remained firmly positive throughout the day. The Dow soared 205.82 points or 1.4 percent to 15,373.83, the Nasdaq jumped 45.42 points or 1.2 percent to 3,839.43 and the S&P 500 surged up 23.48 points or 1.4 percent to 1,721.54.
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