[R]4:00PM Investors return to buy more shares on retail sales data.[/R]

-Dow up 91.97 points, Nasdaq 40.98 and S&P 500 15.62.
-Yield on 10-year bond closed at 5.1% and on 30-year bond at 5.2%.
-Crude oil lost 95 cents to $70.34 per barrel.
-Gold closed $14.90 lower to $627.60 per ounce.
-Markets in Europe closed mostly higher led by 0.45% rise in the U.K.
-Latin American markets closed higher led by 3.33% rise in Brazil and 2.4% in Mexico.

Market averages closed near its best level at close as investors cheered strong retail sales. Other data on construction spending, auto sales, worker productivity and manufacturing activity weighed on investment sentiment today. Construction spending fell 0.1% surprising economists who had forecasted a rise of 0.2%. Institute of Supply Management’s May index of manufacturing activity fell to 54.4 from 57.3 a month ago. The index indicated that the manufacturing is still expanding but at a slower pace. Labor Department reported that revised worker productivity rose in the first quarter to 3.7% from the previous estimate of 3.2%. The department also reported that the first time jobless claims rose 7,000 to 336,000 for the week ending May 27th. Retail sales in May rose 4.2% vs. forecasted growth of 3.2%. The sales were reported in the survey done by international Council of Shopping Centers.

Industrial, techs and transportation stock led the advancing issues. On New York Stock Exchange and Nasdaq system for every 10 issues advancing 3 issues declined.

[R]3:30PM Familiar pattern of auto sales are repeated in May.[/R]
Auto sales of domestic car makers continue to slide as reported by auto companies. According to the preliminary estimates of the research company Autodata Corp sales in the month of May declined to annual rate of 16.1 million from 16.7 million from a year ago.

Sales declined 16% at General Motors, 11% at Chrysler and 1.9% at Ford. Analysts had expected a decline of 11% at General Motors, 8.6% at Chrysler Group and 7.6% at Ford. Toyota reported a sales rise of 17% and unit volume rise of 25%. Ford reported 7% decline in SUV sales and flat sales for the best selling F-series trucks. Ford has initiated an aggressive plan to discount vehicles and General Motors Chairman and Chief Executive Rick Wagoner said on Thursday that there are no plans for discounting vehicles but did not rule out the possibility of doing so in the coming months. GM also said that that it plans to make 1.225 million vehicles in the second quarter and 1.05 vehicles in the third quarter. Ford said that it plans to build 890,000 vehicles in the second quarter and 710,000 in the third quarter.

Nissan reported 7% decline in sales in the month. Ford Investors did not react to the release of sales data except that Toyota Motors (TM: chart) stock gained $1.20 in the afternoon trading in New York to $108.58.

[R]12:30PM European markets rebounded on U.S. data.[/R]
European markets reversed from earlier declines to close in the positive territory. The upward move was largely contributed by U.S. economic data, which helped ease inflation and interest-rate concerns. Strong results from Man Group sent the stock up 3.4%, providing support to the market sentiment. Among other advancers, French media company Vivendi rose 1.5% after settling a tax dispute with the Internal Revenue Service on the sale of DuPont in 1995. Technology stocks like Nokia and Deutsche Telekom also moved higher. The German DAX 30 gained 0.3%, the French CAC 40 rose 0.4%, and London FTSE 100 climbed 0.5%.

Oil rose above $71 ahead of OPEC meeting. Light crude July delivery rose 51 cents to $71.80 a barrel. London Brent crude gained 40 cents to $70.81. The dollar gained some ground in European trading. The euro traded at $1.2807, down from $1.2814. The dollar bought 112.55 yen, down from 112.59. The British pound stood at $1.8675, down from $1.8689. European gold prices declined. In London the precious metal traded at $630.60, down from $645.90 per ounce. In Zurich gold fell to $629 from $664.75. Silver closed unchanged at $12

[R]11:30AM Major averages moved notably higher.[/R]
Over the course of morning trading, stock markets have advanced, lifted by easing inflation and interest-rate concerns. The strength in the market came on the heels of the Labor Department''s revised report on Q1 productivity, which showed an upward revision to productivity growth as well as a significant downward revision to labor costs. The three major averages rose well above the unchanged line after showing a lack of direction earlier in the session. The airline sector moved notably higher due to a decrease in the price of oil to $70.50 a barrel. The Amex Airline Index rose 1.4%. Networking stocks showed strong performance, with shares of Ciena (CIEN: chart) up 2.3% after reporting a smaller Q2 loss on higher revenue. Retail stocks also posted strength as retailers reported generally strong May sales results in spite of higher gasoline prices. The S&P Retail Index advanced 1.1%. Federated Department Stores Inc. (FD: chart) added 80 cents to $73.63 on its sharply better-than-forecast May sales. JC Penney Co.(JCP: chart) rose $2.78 to $63.54 on strong sales. Food producer H.J. Heinz Co. (HNZ: chart) posted a 19% drop in quarterly profit and said it plans to slash 2,700 jobs and close 15 plants to cut costs. Heinz rose 36 cents to $42.71. Significant declines in metals prices, inspiring profit taking, sent gold and other metal stocks lower. Disk drive stocks showed some weakness, with M-Systems (FLSH: chart) posting a steep loss of 15% after the company initiated an internal review of its prior stock option grants.

[R]Construction Spending unexpectedly declined.[/R]
The Department of Commerce released its report on construction spending in the month of April on Thursday, showing that spending unexpectedly fell compared to the previous month. The report showed that construction spending fell 0.1 percent in April following an unrevised 0.9 increase in March. Economists had been expecting construction spending to increase by 0.2 percent. The decrease in construction spending reflected a 0.1 percent drop in spending on private construction as well as a 0.2 percent decrease in spending on public construction. The report showed that residential construction fell 1.1 percent in April while non-residential construction spending rose 2.5 percent.

[R]10:30AM Indian Sensex falls on political strife about oil price hike.[/R]
Sensex in India lost 327 points, or 3.1%, to finish at 10,071.42. The turnover on BSE came to $725 million or Rs 3,265 crore, lower than Wednesday’s $760 million or Rs 3,531.80 crore. The market witnessed a very weak breadth, as 2,015 stocks lost while 426 that advanced. Auto shares fell in spite of the optimistic sales for May 2006. Maruti Udyog dipped 7%, to Rs 683. The company announced on Thursday it sold 53,396 vehicles in May, 26% higher than 42,286 units sold in the same period last year. Hero Honda lost 8.5% to Rs 705. Hero Honda Motors reported it sold 3,03,666 units in May, a surge of 34% from 226,072 sold in the same period last year. Bajaj Auto plunged 6.7%, to Rs 2,559 and Tata Motors declined 5.6% to Rs 745. Tata Motors has not reported its sales figures for May 2006.

Metal shares were battered. Hindustan Zinc plummeted 15%, to Rs 607, Hindalco plunged 7.5%, to Rs 164.50, Sterlite Industries lost 6.9%, to Rs 400, and Nalco closed down 4.2%, to Rs 214. The steel sector also declined with Tata Steel shedding 6%, to Rs 485. Reliance Energy lost 8.5%, to Rs 451. Engineering & construction company L&T dived 6.5%, to Rs 2,165.70. The stock has fallen 11.6% over the past two trading sessions from Rs 2,450.50 on 30 May. Cellular services company Bharti Tele-Ventures also dipped 5%, to Rs 347, and Hindustan Lever declined 5%, to Rs 221.90. Cipla plunged 4.9%, to Rs 218 and Dr Reddy’s Lab lost4%, to Rs 1,303. Large cap Reliance Industries dropped 2.8%, to Rs 926 on 2.6 million shares. Refinery shares saw selling pressure on delay in oil price hike. BPCL shed 7.6% to Rs 367, HPCL was down 6% to Rs 287 and Indian Oil Corporation (IOC) edged 4% down to Rs 438.50.

[R] 9:45AM Stocks traded in a lackluster fashion at opening.[/R]
Stock markets lacked direction in early trading on Thursday, with investors looking ahead to the release of the May employment report on Friday. Retail stocks were in focus, posting advance in May, despite soaring gasoline prices. Federated Department Stores Inc.(FD: chart) added 76 cents to $73.59 on its sharply better-than-forecast May sales. JCPenney Co. (JCP: chart) also saw strong sales, lifting its stock $2.26 to $63. The gold sector showed significant weakness in early trading as gold for August delivery dropped $20 at $629 an ounce. Energy stocks were also weak, moving lower along with the price of oil, down 94 cents at $70.35 a barrel, extending recent decline. Shares of Exxon Mobil Corp. (XOM: chart) fell 1.3% to $60.13. Meanwhile, the price decrease contributed to some strength in the oil-sensitive airline sector. Some networking stocks showed strong performance, with Ciena (CIEN: chart) up 4.7% after reporting a narrower Q2 loss. Among other socks, shares of biotechnology company Gilead Sciences Inc. (GILD: chart) rose 1.2% after J.P. Morgan Securities raised its rating on the stock. U.S. telephone company AT&T Inc. (T: chart) gained 2.2% after CIBC raised its rating on the company. In the first hour of trading, the Dow Jones industrial average lost 6.24, or 0.06%. The Standard & Poor''s 500 index was up 0.54, or 0.04%, and the Nasdaq composite index rose 4.74, or 0.22%. Bonds steadied after Wednesday''s dive, with the yield on the 10-year Treasury note down to 5.12% from 5.13% late in the prior session.

[R]9:00AM Stock futures indicated a flat opening on economic data.[/R]
U.S. stock futures pointed to a flat opening with the Nasdaq and S&P 500 slightly higher after economic data eased interest-rate concerns, showing that weekly jobless claims rose unexpectedly and labor cost pressures were much better contained in the first quarter. S&P 500 futures were up 0.10 point, even with fair value. Dow Jones industrial average futures were down 8 points, and Nasdaq 100 futures were up 1 point.

In corporate news, retail stocks are expected to be actively traded as a number of big name retailers reported generally strong May sales. Nordstrom (JWN: chart) and Limited Brands (LTD: chart) posted same store sales growth of 7.8% and 7% respectively, exceeding analyst estimates. Sun Microsystems (SUNW: chart), server and software maker, announced plans to cut 4,000 to 5,000 jobs over the next six months, expecting to save $480 to $590 million, with the full impact expected to take effect by the Q4 of 2007. The company added that the plan will result in restructuring charges of $340 to $500 million.

[R]Productivity growth was revised up 3.7%.[/R]
Thursday morning, the Department of Labor released its revised report on first quarter productivity, showing that productivity growth was revised up slightly less than economists expected. The report also showed a significant downward revision to labor costs. The Labor Department said that productivity growth was revised up to 3.7 percent from the 3.2 percent growth originally reported for the quarter. Economists had been expecting productivity growth to be revised up to 3.8 percent. The productivity growth in the first quarter came as output increase by 6.5 percent while hours worked increase by 2.7 percent. Productivity had increased by a more modest 0.2 percent in the fourth quarter. The report also showed that the growth in unit labor costs was revised lower to 1.5 percent from the 2.5 percent previously reported. The 3 percent increase in labor costs previously reported for the fourth quarter was also revised sharply lower to a 0.6 percent drop. The revisions to productivity and unit labor costs are likely to help offset recent concerns about inflation, which may help to ease worries about the outlook for interest rates.

[R]Initial jobless claims climbed unexpectedly.[/R]
The Department of Labor released its report on initial jobless claims in the week ended May 27 on Thursday, showing that jobless claims unexpectedly increased. The report showed that jobless claims rose to 336,000 from the previous week''s unrevised figure of 329,000. Economists had expected jobless claims to fall to 320,000. The less volatile 4-week moving average also increased, rising to 333,500 from the previous week''s revised average of 330,750. This marked the sixth consecutive increase by the moving average. The report also showed that continuing claims in the week ended May 20 rose to 2.433 million from the preceding week''s revised level of 2.414 million. The unexpected increase in jobless claims may raise concerns about the strength of the May employment data due to be released on Friday. Economists currently expect the report to show that the U.S. economy added 180,000 jobs in May.

Brown-Forman Corp, (BFB: chart), liquor and luggage maker, reported its fiscal Q4 net income advanced to 63 cents a share, from 50 cents a share in the year-ago period. The company added its Q4 earnings from continuing operations amounted to 61 cents a share. The company beat analysts forecast for earnings of 54 cents a share

Gymboree Corp, (GYMB: chart), retailer, reported retail sales in the four weeks ended May 27 advanced 19% to compared with the same period a year ago. The company expects Q2 comparable store sales to rise in the mid-to-high single digits and affirmed its guidance for a loss of 7 cents to 9 cents a share, stock-based compensation inclusive. For 2006, Gymboree forecast earnings of $1.37 to $1.40 a share, following the impact of stock-based compensation.