Bulls Back in Charge: Wall Street Rally For Third Day

After its worst two-day plunge in two months, the markets appear to have stabilized as Wall Street closed higher for the third day in a row on Thursday despite a surprise jump in jobless claims.
There were no dramatic economic reports, but a smattering of more upbeat data, including growth in manufacturing activity in the mid-Atlantic region, persuaded investors to take more chances on stocks. Financials were particularly in demand after a report quoting American International Group Inc.'s CEO as saying the company will repay its bailout loans from the government.

The positive manufacturing data from the Federal Reserve Bank of Philadelphia offset the market's disappointment that weekly jobless claims increased for a second week.

Today’s Markets
The Dow Jones Industrial Average rose 70.89 points, or 0.76%, to 9350.05, the Standard & Poor's 500 gained 10.91 points, or 1.09%, to 1007.37 and the Nasdaq Composite picked up 19.98 points, or 1.01%, to 1989.22.

For the week: The Dow is up 28.65, or 0.3 percent. The S&P is up 3.28, or 0.3 percent. The Nasdaq is up 3.70, or 0.2 percent.

For the year: The Dow is up 573.66, or 6.5 percent. The S&P is up 104.12, or 11.5 percent. The Nasdaq is up 412.19, or 26.1 percent.

The economic worries that sent the markets tumbling late last week and earlier this week seem to have faded as Wall Street rallied in the face of bleak news on the labor front and weaker-than-expected results from retailers like Sears (SHLD:65.05, -8.71, -11.81%). The renewed bullish sentiment pushed the S&P 500 back above the crucial 1000 threshold and sent the Dow up more than 200 points in three days, recouping almost all of its two-day plunge.

“The sentiment has been the same since the beginning of July: buyers are in control of the market. Whether that’s justified or not is irrelevant. Right now, stocks cannot go down,” said Michael James, senior equity trader at Wedbush Morgan Securities.

Global Markets
European markets closed solidly higher as the U.K.'s FTSE 100 gained 1.43% to a fresh 2009 high of 4756.58, France's CAC 40 rose 1.59% to 3505.32 and Germany's DAX advanced 1.51% to 5311.06.

Meanwhile, the bulls cheered a wave of buying overseas, where China’s Shanghai Composite surged 4.5% to climb out of bear market territory.
Traders have been carefully watching the action in China, which Wall Street has been hoping would lead the global economy out of recession. Chinese stocks have plunged in recent days, bolstering the bears’ case that stocks have gotten too far ahead of the economy.
In Asia, Japan's Nikkei 225 rallied 1.76% to 10383.41, Hong Kong's Hang Seng soared 1.88% 20328.86 and China's Shanghai Composite surged 4.52% to 2911.58.

Oil rises on economic recovery optimism

Oil prices rose slightly to near a seven-week high Thursday, as optimism for economic recovery and rising fuel demand outweighed a rise in new U.S. jobless claims. U.S. crude for September delivery, which expired at Thursday's close, settled 12 cents higher at $72.54 a barrel. Crude prices earlier rose to $72.88, the highest level since June 30. October Brent futures settled down $1.26 a barrel at $73.33.

Oil markets have been tracking stocks and the U.S. dollar, as well as broad economic indicators, for signs a recession may soon end, which could foreshadow rebounding fuel demand.