Stocks extend rally into 3rd day after better-than-expected report on jobless claims
NEW YORK (AP) — Stocks rose for a third day as investors welcomed a report that first-time jobless claims fell more than expected last week.
Mixed reports Thursday from retailers on June sales results helped boost some individual stocks but did not widely affect the market.
The Labor Department said initial jobless claims fell to their lowest levels since early May. Initial claims fell to 454,000 last week, better than the 465,000 economists polled by Thomson Reuters had forecast.
The drop in claims, at least temporarily, reverses a trend of disappointing jobs reports that had been sending stocks lower. Prior to a surge over the past two days, stocks had been sinking for two weeks because of economic reports that pointed to slower economic growth.
High unemployment has dragged down consumer confidence, which in turn slowed down spending, which accounts for the bulk of U.S. economic activity. Without a rebound in jobs and sales, the economy is likely to continue to post only modest growth.
Reports from retailers indicated June sales were mixed. Limited Brands Inc., which owns Victoria’s Secret and Bath & Body Works, reported sales that topped expectations. Many teen retailers saw a drop in sales last month, including Hot Topic Inc. and The Wet Seal Inc.
In midmorning trading, the Dow Jones industrial average rose 81.17, or 0.8 percent, to 10,099.45. The Standard & Poor’s 500 index rose 7.56, or 0.7 percent, to 1,067.83, while the Nasdaq composite index rose 15.80, or 0.7 percent, to 2,175.27.
The Dow jumped back above 10,000 Wednesday after soaring 275 points. 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.
Interest rates rose in the Treasury market as investors sold bonds following the upbeat 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 back above 3 percent to 3.05 percent from 2.99 percent late Wednesday. Its yield is used as a benchmark for mortgages and other consumer loans.
Hot Topic rose 34 cents, or 7 percent, to $5.18, while Wet Seal fell 11 cents, or 3.1 percent, to $3.43.
Teen clothing retailer Abercrombie & Fitch Co. rose $2.56, or 7.8 percent, to $35.46 after its revenue 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 revenue at stores open at least one year was unchanged in June. Analysts had expected a 3.4 percent increase. The stock fell $1.38, or 7 percent, to $18.34.
Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 195 million shares, compared with 182 million shares traded at the same point Wednesday.
The Russell 2000 index of smaller companies rose 6.38, or 1 percent, to 618.04.
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 $1.2680, 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 1.7 percent, Germany’s DAX index rose 0.8 percent, and France’s CAC-40 gained 1.4 percent. Japan’s Nikkei stock average jumped 2.8 percent.
, On Thursday July 8, 2010, 10:39 am