Dow Jones rallies as investors cheer job data, economy
U.S. stocks rallied amid more evidence of a U.S. economic recovery, sending the closely tracked Dow Jones industrial average to one of its best days this year.
Investors put an end to three straight days of losses after new reports showed that the number of people filing for unemployment claims fell last week, while the number of homes under construction rose. The data helped paint a more upbeat picture about the economy that put Wall Street in a buying mood.
The Dow surged 116 points, or nearly 1%, to 12897.57, putting the blue chips within striking distance of Dow 13,000. The index last traded at the psychologically important mark in May 2008.
The broader Standard & Poor’s 500 index rose 14.19 points, or 1.06%, to 1357.56; and the technology-heavy Nasdaq composite jumped 40.85, or 1.4%, to 2956.36.
European markets had fallen earlier due to an announcement fromMoody’s, the credit rating agency, that it was considering downgrading some of the world’s largest banks.
The unemployment report showed that the number of new unemployment benefit claims last week fell 13,000 from the week before, to 348,000, according to a Thursday report from the Labor Department. That is the lowest number since March 2008 and less than the 365,000 expected by economists polled by Bloomberg. It was another sign of growing strength in the labor market as hiring also has shown gains in recent weeks.
The good news on employment was compounded by continuing signs of a stabilizing residential real estate market. The number of developers breaking ground on new homes in January beat the expectations of forecasters when the Commerce Department reported that the annual rate of new-home starts in January rose 1.5% to 699,000.
The gains in the market were tempered by continuing concerns that the international community will not approve more aid for Greece in meetings next week. In response to the economic problems in Europe, Moody’s put 114 European financial institutions on notice for a possible downgrade. Moody’s said its concern about European banks was due to the “disrupted markets and a deteriorating, uncertain economic outlook” in Europe.
Banking stocks declined in European trading, with Barclay’s down 1.5% and HSBC down 1.2%.
Moody’s also put eight non-European financial institutions on notice, including Bank of America, and JPMorgan Chase & Co., in part because of new regulations that could crimp profits.
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