Late Surge Sends U.S. Markets Higher

October 16, 2008 5:23 p.m. EST

New York, NY (AHN) - U.S. markets shook off poor manufacturing data from the Philadelphia Federal Reserve Bank and rallied off lows, finishing 4 percent higher on Thursday.

All three major indices sold off just after the release of the October Philly Fed Manufacturing Index at 10 a.m. ET. The index came in at negative 37.5, a massive drop from 3.8 in September and the lowest reading since October 1990. The indices were down more than 4 percent before selling started to slow.

The Dow Jones Industrial average, surging higher in the last hour of trading, added 401 points or 4.7 percent on the session. 27 of 30 Dow components finished higher with Exxon Mobil, up 11.4 percent and Wal-Mart, up 9.1 percent leading the way.

The S&P 500 rose 38 points or 4.3 percent. All ten major economic sectors finished the session higher. The energy sector rebounded nicely, adding 7.8 percent while the financials were the laggard, up 1.7 percent.

Tech was the strongest on a percentage basis, the Nasdaq Composite rose 89 points or 5.5 percent. The index found strength in Yahoo and Microsoft as rumors of renewed talks of a union for the two tech giants sent shares higher.

Crude oil continued its decline, falling $4.69 a barrel on Thursday to settle at $69.85. The commodity is now down more than 100 percent from its July high of $147 a barrel.

In corporate news, Citigroup and Merrill Lynch reported quarterly earnings. Both reported a loss due to write-downs for bad assets as the companies continue to cleanup their books.

On the economic front, initial unemployment claims for the week ending Oct. 11 fell 16,000 to 461,000, below economists' expectations of 470,000.

The Consumer Price Index (CPI) for September fell to 0.1 percent and is expected to stay relatively flat in the current month due to the large decline in energy prices.

Friday's session will see the release of September housing starts and a preliminary reading of the October Michigan Sentiment survey.