Bulls reemerge Thursday thanks to strong economic data. The Dow (^DJI) gained 199.89, or 2.05 percent, to a level of 9,962.58. The S&P 500 (^SPX) added 23.48 points, or 2.25 percent, to 1,066.11. The Nasdaq (^IXIC) tacked on 37.94 points, or 1.84 percent, to 2,097.55. Volume was moderate on the session with the NYSE trading 1.45 billion shares and the Naz turning over 2.32 billion shares. Market breadth was positive on the session by a 25-to-6 and 19-to-8 margin on the Big Board and Naz respectively.

Earnings announcements were abundant since Wednesday's close, but the focus Thursday was firmly on the economy. The bulls celebrated the first report on third quarter GDP, as well as another decline in weekly jobless claims. However, there still was plenty of earnings news to digest including reports from Proctor & Gamble (PG), Motorola (MOT) and ExxonMobil (XOM).

Jobless claims for the week ending Oct. 24 improved slightly, down by 1,000 claims to a level of 530,000. This puts the four-week moving average at 526,250, which is down about 20,000 compared with the year ago period. The best news in the report was the sharp drop in continuing claims, which fell by 148,000 to 5.797 million. Nonetheless, the amount of jobs being lost remains high and at a level that points to further declines in nonfarm payrolls.

Third quarter GDP provided incentive to buy today after the report showed growth of 3.5 percent in the quarter. This was above expectations for a gain of about 3.0 percent and well above the 0.7 percent drop seen in the second quarter. The GDP price index came in well below estimates at growth of 0.8 percent, 6-tenths below expectations. However, economists are pointing out that despite improvements in GDP, this could be the highest reading for many quarters.

Dow components Proctor & Gamble and ExxonMobil reported earnings this morning, but the results were mixed. PG reported very strong earnings, resulting in strong gains for the stock. However, oil giant XOM missed expectations, but managed to close slightly positive on the session. PG announced that profits fell one percent with sales down six percent, but EPS was better than expected. The company also had positive things to say about the fourth quarter, helping push the stock higher by 4.04 percent to a price of $59.54.

XOM disappointed traders when it reported earnings per share 5-cents below expectations. Nonetheless, the oil giant made nearly $5 billion in profits, though this was down 68 percent from the year ago period. Oil producers have suffered from low demand thanks to the recession, but high oil prices have helped offset this weakness. Despite what most viewed as a very disappointing report, shares of XOM managed to close positive at a price of $73.96.

The bulls will try to finish the week and month with strength Friday and earnings news and economic data will be the focus. Data on personal income and outlays, the Chicago PMI and consumer sentiment are all on tap for release Friday morning. However, unless we get another sharp rally tomorrow, stocks are likely to end in the red for the week.

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

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