MarketView for April 17

Summary

Wall Street ended a holiday-shortened week with mostly modest gains on Thursday, though the S&P 500 notched its largest weekly advance since July as Morgan Stanley and General Electric rallied after strong results. They were the two latest companies to post earnings that exceeded expectations, helping to lift the S&P 500 and the Nasdaq to their fourth straight daily advance. General Electric (GE.N) posted a 12 percent rise in overall industrial profits and its stock gained 1.7 percent to $26.56.

Google and IBM fell on disappointing figures and limited the broader market's gain. IBM's slide pushed the Dow Jones Industrial Average into slightly negative territory by the closing bell. Google was down 3.7 percent at $543.34 and IBM off 3.3 percent at $190.01 a day after both reported earnings that failed to impress Wall Street.

With less than one-fifth of S&P 500 companies having reported results so far, about 63 percent have topped earnings expectations, according to Thomson Reuters data, exceeding the 56 percent average over the past four quarters. About 52 percent have beaten revenue forecasts, about even with the 54 percent average over the past four quarters.

Morgan Stanley rose 2.9 percent to $30.76 after the financial services company reported a rise in first-quarter earnings, while Goldman Sachs moved higher by 0.1 percent to $157.44 after reporting earnings that fell less than expected.

For the week, the Dow gained 2.4 percent; the S&P 500 was up 2.7 percent and the Nasdaq chalked up a gain of 2.4 percent. The Dow had its best week since December while the S&P 500 closed out its best week since July.

The CBOE Volatility index fell 21.6 percent over the week, its largest weekly decline since January 2013.

After the closing bell, Advanced Micro Devices reported first-quarter results that exceeded expectations, sending its shares up 2.9 percent to $3.86 in extended trading.

During the regular session, SanDisk was the S&P 500's largest gainer. SanDisk's shares rose 9.4 percent to close at $82.99, a day after the company reported first-quarter revenue ahead of expectations.

Baker Hughes chalked up its highest price since August 2011 after the world's third-largest oilfield services company posted better-than-expected results as revenue in its core North American business rose nearly 7 percent. The shares were up 3 percent to close at $68.33 after earlier rising as high as $69.78.

UnitedHealth Group fell 3.1 percent to $75.78 after the health insurer said it has spent more than $100 million to cover a pricey new hepatitis C drug from Gilead Sciences, a higher cost than it expected by "multiples. Likewise, WellPoint fell 3.8 percent to close at $92. Questions from Congress on the cost of that drug prompted a sharp selloff in Gilead in mid-March that lasted for nearly a month. The stock rose 1 percent to $70 on Thursday.

The latest data showed the U.S. economy's health was improving. The number of Americans filing new claims for unemployment benefits rose less than expected in the latest week and came near pre-recession levels. Factory activity in the U.S. mid-Atlantic region expanded in April at a faster clip than anticipated, according to a survey from the Federal Reserve Bank of Philadelphia.

Shares of China's Weibo opened slightly below the $17 pricing of its initial public offering, which was at the lower end of expectations on concerns about the microblogging service's slowing user growth. The stock, however, turned sharply higher in afternoon trading and ended up 19.1 percent at $20.24.

Western Union fell 5 percent to $15.25 after Wal-Mart said it was launching a domestic money transfer service in partnership with Euronet Worldwide subsidiary Ria Money Transfer.

Shares of MoneyGram International, which currently provides money transfer services for Wal-Mart, fell 17.7 percent to $14.81. Euronet rose 4 percent to $42.44. Wal-Mart gained 0.6 percent to end the day at $77.66.

Trading volume was light ahead of the Good Friday market holiday. Approximately 6.1 billion shares changed hands on the major equity exchanges, according to BATS exchange data, a number that was lower than the month-to-date average of 6.88 billion shares.

Unemployment Claims Remain Steady

The Labor Department reported on Thursday that new applications for unemployment benefits held near their pre-recession levels last week, ticking up by 2,000 claims to a seasonally adjusted 304,000 claims for the week ended April 12,. That number was close to the 6-1/2 year low touched the prior week.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, fell 4,750 to 312,000, the lowest level since October 2007.

A Labor Department analyst said no states were estimated and there were no special factors influencing the state level data.

The claims data covered the survey week for April nonfarm payrolls. Despite last week's increase, claims were down 19,000 between the March and April survey periods, which suggest acceleration in job growth.

Job growth averaged about 195,000 per month in February and March, with the unemployment rate holding at near a five-year low of 6.7 percent over that period. Labor market indicators such as job openings, the duration of unemployment and short-term unemployment, suggest some tightening in conditions.

On Wednesday, Federal Reserve Chair Janet Yellen said it was "quite plausible" the economy would be back to near full employment by the end of 2016.

The economy is gaining traction after being held down by an unusually cold and snowy winter. Retail sales and industrial production have been robust. Employment has picked up and there is a bit of inflation in the economy.

The health of the labor market will most likely determine when the U.S. central bank will start raising benchmark interest rates, which it has kept near zero since December 2008.

The Fed is expected to conclude its monthly bond buying program later this year and most economists expect the first rate hike will be in the second half of 2015.

The claims report showed the number of people still receiving benefits after an initial week of aid dropped 11,000 to 2.74 million in the week ended April 5. That was the lowest level since December 2007.