Bulls look to recover Wednesday's losses with jobless claims data providing strength. The FOMC statement yesterday was bullish in nature, which initially pushed stocks higher. However, a "sell the news" mentality took over the final 90 minutes of trading as traders took profits. Stocks in the news Thursday included Electronic Arts (ERTS), which got bad news from Microsoft, and retailers Abercrombie & Fitch (ANF), AnnTaylor (ANN) and Chico's FAS (CHS).

Jobless claims unexpectedly fell by 21,000 the week ending Sept. 19 to a level of 530,000. This is the third straight week of declines, which helped push the four week moving average down 11,000 to 553,500. This is the lowest reading since January, though the overall level of claims remains well above their level closer to 350,000 a few years ago. Another positive in the report was the sharp drop in continuing claims for the prior week, which fell by 123,000 to a level of 6.138 million.

Shares of ERTS are down nearly three percent in early trading after Microsoft (MSFT) stated it has no plans to buy the company. ERTS shares rallied eight percent Wednesday on rumors MSFT was looking at the video game maker. However, Microsoft stated that ERTS is an important partner, but there will be no acquisitions. ERTS is trading near $19.35 with a 52-week range from $14.24 to $40.61. MSFT shares are up about one percent to a price at $26, not far from a 52-week that sits at $27.66.

Goldman Sachs raised its price target on retailers ANF, ANN and CHS on the view current robust trends in spending could continue into the holiday season. Shares of ANF and CHS are seeing mild gains on the news, but ANN shares are off more than three percent. However, ANN shares are trading near $15.65, substantially higher than their 52-week low at $2.41.

Morgan Stanley provided bullish comments this morning as well, raising their year-end S&P 500 ($SPX) target to 1,050 form 900. Morgan sees better than expected earnings keeping the index elevated. The SPX is already trading above this level with Morgan saying that equities have already experienced large advances.

The existing home sales report is due out this morning for August with estimates for a rise to 5.35 million annualized units, up from 5.24 million units. This would be the highest reading for existing home sales in more than two years.

Trades will also continue to debate the Fed statement from Wednesday, which was bullish on the economy, but stated that the Fed would start to cut back on its stimulus. However, interest rates are expected to stay low for some time.

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