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Tags: economy | stocks

Stocks Climb After Jobless Claims Fall

Thursday, 08 July 2010 04:06 PM

Stocks rose for a third day Thursday after a drop in first-time unemployment claims eased concerns about the economy.

The Dow Jones industrial average rose about 100 points in late afternoon trading after climbing 275 Wednesday and advancing modestly Tuesday. Broader indexes also rose.

The government said initial claims for unemployment benefits fell last week to their lowest levels since early May. Claims fell to 454,000, better than the 465,000 forecast by economists polled by Thomson Reuters.

The drop in claims halts at least temporarily a string of disappointing jobs reports. Those reports, including the government's June employment numbers, have contributed to a sharp pullback in stocks over the past few weeks.

High unemployment has dragged down consumer confidence, which in turn has slowed spending. And because consumers account for about 70 percent of U.S. economic activity, the recovery is unlikely to gain much momentum unless consumers are working and feeling more secure about spending.

Major retailers reported mixed June sales numbers after shoppers again spent cautiously. Analysts said stores were discounting heavily in order to bring customers in.

Hank Smith, chief investment officer of equity at Haverford Investments in Radnor, Pa., said some investors have been worried about a so-called "double-dip" in the economy but that more recent data, including Thursday's jobs report, are a reminder that the recovery is continuing.

"It's hard to see rolling into a double dip," he said.

In the final hour of trading, the Dow rose 101.26, or 1 percent, to 10,119.54. The Standard & Poor's 500 index rose 7.05, or 0.7 percent, to 1,067.32, while the Nasdaq composite index rose 10.56, or 0.5 percent, to 2,170.03.

The Dow jumped back above 10,000 Wednesday. It was the second straight day of gains and the first back-to-back advance since the middle of June. Traders say the recent gains, which came after seven straight days of declines, were not tied to any one particular catalyst. Instead some investors jumped into the market thinking prices had been beaten down too much in the past couple of weeks. But trading volume has been light this week. That's a sign that few investors are driving the advance. That means the gains could quickly unravel if more disappointing economic news arrives.

Interest rates were mixed in the Treasury market as investors sold bonds following the jobs report. Rates usually rise when there are signs the economy is improving because a stronger economy eventually leads to inflation.

The yield on the 10-year Treasury note, which moves opposite its price, rose to 3.02 percent from 2.99 percent late Wednesday. The yield fell below 3 percent last week for the first time since April 2009 as investors worried about the economy rushed into Treasurys. The yield on 10-year Treasurys helps determine the interest rate on some mortgages and other consumer loans.

Abercrombie & Fitch rose $2.56, or 7.8 percent, to $35.47 after its sales at stores open at least a year rose 9 percent. Analysts surveyed by Thomson Reuters expected a gain of 2.8 percent.

Gap Inc. said sales at stores open at least one year was unchanged in June. Analysts had expected a 3.4 percent increase. The stock fell $1.45, or 7.4 percent, to $18.27.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 878 million shares, compared with 922 million shares traded at the same point Wednesday.

The Russell 2000 index of smaller companies rose 6.76, or 1.1 percent, to 618.42.

Overseas markets rose after the International Monetary Fund raised its world growth estimate for the year to 4.6 percent from 4.2 percent. The climb also comes as the European Central Bank wrapped up a meeting where it kept a key interest rate unchanged.

The euro rose to $1.2693, its highest level since May. The common currency used by 16 countries has been battered in recent months by waning confidence in the ability of weak European countries to manage their massive debt loads.

Britain's FTSE 100 rose 1.8 percent, Germany's DAX index rose 0.7 percent, and France's CAC-40 gained 1.6 percent. Japan's Nikkei stock average jumped 2.8 percent.

© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Stocks rose for a third day Thursday after a drop in first-time unemploymentclaims eased concerns about the economy.The Dow Jones industrial average rose about 100 points inlate afternoon trading after climbing 275 Wednesday and advancing modestlyTuesday. Broader indexes...
Thursday, 08 July 2010 04:06 PM
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