After stocks dove yesterday on Fed Chairwoman Janet Yellen's indication that the central bank could lift interest rates as soon as a year from now, investors recouped their losses today as strong economic data lifted the market. The Dow Jones Industrial Average (DJINDICES: ^DJI ) gained 109 points, or 0.7%, and the S&P 500 moved up 0.6%.
Initial unemployment claims were encouragingly low for the second week in a row, coming in at 320,000, better than estimates at 330,000, and showing that the slow job growth during the winter months may have just been a factor of severe weather. Elsewhere, the Philadelphia Fed's manufacturing index jumped all the way from -6.3 to 9.0, above expectations of 2.0, and indicating robust growth in the sector in the mid-Atlantic region. On the other side of the coin, February existing home sales fell to a 19-month low, in line with estimates at a seasonally adjusted annual rate of 4.6 million.
After the bell, investors got more good news, as 29 of 30 major banks passed the Fed's stress test, proving that they would be able to survive another recession or financial crisis. Only Zions Bancorp failed to meet the criteria. Next week, the Fed will announce which banks will be allowed to increase their dividends and buy back shares. The S&P 500 financial sector was the day's strongest performer, gaining 1.7%.
Shares of JPMorgan Chase (NYSE: JPM ) finished up 3.1%, perhaps on anticipation of the stress-test results, and on news that it sold a physical commodities trading unit for $3.5 billion. The sale of Mercuria Energy Group not only netted the banking giant some quick cash, but also helps keep it on the up-and-up with regulators, a plus at a time when the bank is still recovering from several lawsuits dating back to the financial crisis. As part of the Dodd-Frank Act, banks are partially restricted from trading on their own accounts. JPMorgan had previously announced its intention to sell such units.
After hours, Nike (NYSE: NKE ) reported third-quarter earnings. Shares increased off the bat, up 2.5% at one point as the company beat estimates on top and bottom lines; but they were down 3% after the sneaker maker provided a weak outlook during the conference call. Negative foreign currency translation put a dent in earnings last quarter, as the company had just 4% growth in profit despite a 12% increase in sales. Management expects exchange rates to continue to be problematic, saying it could put a dent in its projection of mid-teens earnings growth for the year. The falling value of the Japanese yen and emerging-market currencies have been particularly troublesome for the sportswear giant.
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