U.S. MARKET AVERAGES

Rise in oil and gas prices failed to stem the broader averages advance. Market roared back in the mid-afternoon as yield on 10-year bonds failed to advance and stayed at 4.29%.

Morning trading in the market was quite as market ignored government reports of initial claims of unemployment and second quarter GDP data. Market chose to focus on what impacts Hurricane Katrina and Rita will have on the current quarter GDP and future unemployment claims. The initial claims of unemployment fell less than expected which most traders took it as a sign of underlying strength in the economy. Market has been worried that Hurricane Katrina related claims may spike the unemployment claims.

Market remained unsettled in the morning hours as oil and gas prices controlled the market’s rise. In the afternoon hours bond yields did not rise in sympathy with the rising oil and gas prices and that gave boost to the market averages till the end of the session. At close Tech and financials sectors led broader averages rise.

Tech stocks advanced in the afternoon and built on the early gains near the end of the session. Dell, Apple Computer, Advanced Micro Devices, Yahoo, Amazon, and eBay advanced by more than 2%.

Initial Public Offering of WebMD Health Corp (WBMD: chart) was priced at $17.50 per share and saw its stock quickly rise to $30 before closing at $24.40. Morgan Stanley and Citigroup Inc. priced 6.9 million shares at the high end of the filing range of $15.50 and $17.50.

MOVERS AND SHAKERS

PepsiCo (PEP: chart) added 2.5% because the company posted a higher-than-expected third-quarter revenue and profit. The soft drink and snack company said its third-quarter profit rose by 18% percent, while its revenue rose to $8.18 billion from $7.26 billion. Total volume of products sold rose 8%.

Ford Motor Co. (F: chart)was up 1.1%, following a report in The Wall Street Journal that the company will renew its global purchasing process of $90 billion a year by cutting suppliers to less than 1,000 from near 2,500. The company described cost savings as significant, according to the report.

Guidant Corp. (GDT: chart)dropped 1.8% after The New York Times reported that criminal agents at the Food and Drug Administration will survey the way the company handled problems with heart devices. The company has agreed to be purchased by Johnson&Johnson and the deal will be completed until the end of 2005.


ECONOMIC NEWS

The number of people filing for first-time unemployment benefits dropped in the most recent week, according to government data released Thursday, with the measure coming in below economists' expectations.

The U.S. Labor Department revealed that initial jobless claims came in at 356,000 for the week ended September 24, down 79,000 from the previous week's revised total. Economists had expected the number of claims to drop, but they had, on average, predicted a more moderate decline to a level around 400,000. In the most recent week, initial claims continued to be inflated by filings from people impacted by Hurricane Katrina.

The U.S. economy saw notable growth in the second quarter, according to a report from the Department of Commerce, although it remains to be seen how much economic growth will be impacted by hurricanes Katrina and Rita.

The Commerce Dept. said that second quarter GDP grew at an annual rate of 3.3 percent, unchanged from the preliminary estimate but down from the 3.8 percent growth seen in the first quarter. Economists had been expecting second quarter GDP growth of 3.3 percent.

The report showed that the GDP growth in the second quarter was partly due to strong consumer spending, which grew by 3.4 percent for the quarter. This represents an upward revision from the 3 percent growth previously reported. The GDP growth also reflected increased exports, equipment and software spending, residential fixed investment, and government spending. The growth was partly offset by a downturn in private inventory investment.

Additionally, the Commerce Dept. said that prices excluding food and energy showed upwardly revised growth of 1.7 percent compared to the preliminary estimate of 1.6 percent growth. The price growth still came in below the 2.4 percent increase reported for the first quarter.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mostly in the positive. The strong performance was led by the Nikkei which closed at a new four-year high of 1.4% at 13617.24 with gains, made on the back of the stronger dollar, positive retail sales data and optimism about the domestic economy ahead of two economic reports. Hong Kong’s Hang Seng rose 1.4%, reflecting gains in commodity prices and higher U.S. durable goods orders. South Korea’s Kospi ended up 0.2% at a record of 1,231 22, despite disappointing economic news.