By Peter McKay
A decline in continuing unemployment claims pushed stocks higher
Thursday as the consumer sector rallied on expectations of higher
consumer spending, a key force in the U.S. economy.
The Dow Jones Industrial Average (DJI) traded up 89 points, or
0.9%, to 10,425.63. Of the index's 30 components, 25 traded in
positive territory, led by Home Depot Inc. (HD), Walt Disney Co.
(DIS) and Alcoa Inc. (AA).
The Standard & Poor's 500 Index (SPX) increased 0.8% to
1,105, with the consumer-discretionary sector rising 1.4%.
Starbucks Corp. (SBUX), Kohl's Corp. (KSS) and Limited Brands Inc.
(LTD) were all up more than 2.5% ahead of November retail-sales
data set to be released Friday morning.
A Thursday report from the U.S. Labor Department showed a
bigger-than-expected weekly rise in filings for jobless benefits,
though the number of continuing claims, defined as claims lasting
more than one week, showed a decline. .
"The economic data we're seeing really underscore how industries
and markets are continuing to repair themselves," which may
alleviate the need for renewed government stimulus or other efforts
to spur a recovery in 2010, said Jim Russell, senior portfolio
strategist at U.S. Bank.
The initial-claims data followed last week's surprisingly strong
report on November nonfarm payrolls, which showed that the U.S.
economy has almost ceased shedding jobs.
However, some traders remain concerned about the cumulative
effect of millions of job losses from the recent recession. With
Thursday's gains so far, the Dow is up just 60 points since last
week's release of better-than-expected monthly payroll data.
"All of the little shimmers of hope that we have gotten in the
data haven't been able to drive prices higher with any
consistency," said Chris Johnson, chief executive of Johnson
Research Group, a trading and analysis firm in Cincinnati. "It just
shows you there's still a lot of hesitance out there. We see a
market that's just as willing to sell on the news as buy the
news."
Other indexes were mixed in recent action. The Nasdaq Composite
Index (RIXF) rose 0.6%. The Russell 2000 Index (RUT) was flat.
Oil prices, which had fallen for six straight sessions coming
into Thursday due to worries about sagging U.S. demand, continued
to be weak. Oil futures were recently off 46 cents to $70.21 a
barrel in New York.
In other economic news, the Commerce Department reported that
the U.S. trade deficit narrowed by 7.6% to $32.9 billion in
October. Imports rose by 0.4%, suggesting a somewhat improved
demand picture domestically. .
Despite the gain in stocks, volume was light, with NYSE
Composite volume just 2.7 billion shares, less than halfway to the
full-day average so far this year.
Investors will be paying close attention to a policy statement
from the U.S. Federal Reserve when it determines interest rates
next week.
Treasury prices slipped following a poorly bid auction of
30-year government debt. The 10-year note was off 8/32 to yield
3.463%. The 30-year bond was off 26/32 to yield 4.465%.
The dollar rose against the euro and Japanese yen, but lost
ground against the Australian dollar and Canadian dollar. The U.S.
dollar index (DXY) was recently flat.