U.S. Stocks Gain, Boosted By Jobs, Housing Data, Italy
30 December 2011 - 3:25AM
Dow Jones News
U.S. stocks gained Thursday morning after investors were
heartened by U.S. domestic data and a drop in borrowing costs for
heavily indebted Italy.
The Dow Jones Industrial Average gained 98 points, or 0.8%, to
12250 in Thursday morning trading, taking back more than half of
Wednesday's 140-point decline, the measure's biggest single-day
loss in over two weeks.
The Standard & Poor's 500-stock index ticked higher by 10
points, or 0.8%, to 1260, while the Nasdaq Composite added 13
points, or 0.5%, to 2603.
Leading the U.S. data was a slight rise in initial jobless
claims to a seasonally adjusted 381,000 last week. Though the
figure was higher than economists' forecasts, it was the fourth
straight week below the key 400,000 level. Economists generally
believe that weekly claims must remain consistently below that
level to signal labor-market improvement.
An unexpected jump in U.S. pending home sales also helped boost
sentiment. The number of Americans signing contracts to buy
existing homes increased in November to the highest level in 19
months, another sign of improvement for a sector that has faced a
long malaise.
"It's more confirmation that we are in a sustainable albeit
modest recovery," said Margaret Patel, senior portfolio manager at
Wells Capital Management. "We still have resilience in the face of
setbacks, either from the European meltdown or a developing market
slowdown."
European markets were ahead after Italy's auction of longer-term
bonds produced lower yields than a month ago. The Stoxx Europe 600
was up 0.4%, while Germany's DAX added 0.4% and France's CAC 40
rose 0.7%.
Italy's funding costs eased even though its 7.02 billion euro
($9.08 billion) bond auction failed to meet the heavily indebted
government's maximum quota. The average rate on the fixed-rate
bonds maturing in November 2014 fell to 5.62% from 7.89% at last
month's auction, and the average yield on the March 2022 bonds
dropped to 6.98% from 7.56%. That put the borrowing cost just below
the key 7% level that analysts say isn't sustainable over the
longer term.
The euro traded slightly above $1.29 after touching an 11-month
low against the dollar and a 10-year low against the yen.
Asian bourses were mixed, with China's Shanghai Composite
gaining 0.2%, its second consecutive gain, and Japan's Nikkei Stock
Average slipping 0.3% for its third loss in a row.
Gold futures lost 1.7% to $1,537.10 an ounce, while crude oil
futures shed 0.3% to $99.07 a barrel.
Still ahead on the economic calendar is a reading on Kansas
City-area manufacturing activity in December at 11 a.m.
Shares of Chesapeake Energy Corp. (CHK) gained 1.2% after the
natural-gas producer said it would sell $865 million in
Pennsylvania pipelines to spun-off subsidiary Chesapeake Midstream
Partners LP (CHKM), which added 4.7%.
Fushi Copperweld Inc. (FSIN) climbed 3.2% after the Chinese
maker of electrical conductor products said it is considering a bid
to be taken private by its chairman and co-chief executive. The
offer values the company at $363 million.
Exar Corp. (EXAR) lost 2% after lowering its fiscal
third-quarter revenue and gross margin outlook, citing weaker
economic conditions in Asia and Europe.
Leggett & Platt Inc. (LEG) added 0.9%. The company said it
expects to record a charge of $36 million, or about 16 cents a
share, in the fourth quarter to reflect restructuring activity,
including the close of some manufacturing facilities.
-By Brendan Conway, Dow Jones Newswires; (212) 416-2670;
brendan.conway@dowjones.com
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