Latest Job Data Help Lift Stocks
A steady unemployment picture boosted Wall Street’s confidence in the economy Thursday, pushing stocks moderately higher and giving the major equity indexes a gain for the shortened trading week.
Even though the Labor Department reported a slight rise in first-time unemployment claims, the market wasn’t alarmed, given that claims were still far lower than a year earlier, and the number of people receiving unemployment insurance was at a three-year low.
The news was enough for buying to resume after Wednesday’s sell-off that was prompted by concerns over the Federal Reserve’s interest rate policy.
“I think it took a little while to figure out what the interest rate policy would be, but even if interest rates double by year’s end, the economy is strong enough and stable enough to easily manage that,” said Kevin Caron, market strategist for Ryan, Beck & Co. “You’ve got a very strong set of economic data out there. Earnings are good. It’s a good picture all around.”
However, trading was sluggish and volume was light before a three-day weekend. The markets will be closed today in observance of a national day of mourning for former President Reagan.
The Dow Jones industrial average gained 41.66 points, or 0.4%, to 10,410.10.
Broader stock indicators also closed higher. The Standard & Poor’s 500 index was up 5.14 points, or 0.4%, at 1,136.47, and the Nasdaq composite index gained 9.26 points, or 0.5%, to 1,999.87.
All three indexes ended the week higher. The Dow was up 1.6% for the week, while the S&P; 500 gained 1.2% -- the third straight week of gains for both. The Nasdaq reversed last week’s slide, closing the week up 1.1%.
Prices on the benchmark 10-year U.S. Treasury note rose after a measure of demand at a government auction of $10 billion of the securities was the strongest since 1993.
Investors were lured by a yield of 4.83%, close to the highest yield on auctioned 10-year notes since May 2002.
The yield on previously issued 10-year notes dropped to 4.80%, down from 4.81% on Wednesday. Bond yields and their prices move in opposite directions.
U.S. oil prices rose 86 cents a barrel, to $38.40, after the International Energy Agency increased its 2004 demand estimate. After hitting a record price of $42.45 last week, prices stabilized this week.
On Wall Street, energy shares including Exxon Mobil and ConocoPhillips led the rally amid optimism that economic and profit growth would withstand rising oil prices.
“Oil could be an awful lot higher without bothering anyone,” said Forrest Mervine, who helps manage $1.3 billion at Philadelphia Corp. “There’s going to be a recovery in the economy that will be significant” for stocks.
Exxon added 53 cents to $43.98, and ConocoPhillips climbed 95 cents to $75.05.
Drilling activity may improve faster than expected, James Stone, an analyst at UBS, wrote in a note. Stone boosted his recommendation for BJ Services and five other oil-services companies to “buy” from “neutral.”
BJ Services, which specializes in helping energy companies extract natural gas, added 72 cents to $43.61. Ensco International rose 38 cents to $26.52, and Schlumberger advanced 48 cents to $58.40.
Among other market highlights Thursday:
* Target gained 12 cents to $45.75 after it announced the sale of its struggling Marshall Field’s department store division to May Department Stores for $3.24 billion. May was down a penny at $28.87.
* H&R; Block rose 32 cents to $47.15 on the strength of its latest quarterly earnings report. The company beat Wall Street expectations by 7 cents a share, with higher per-client fees more than offsetting an overall drop in customers.
* National Semiconductor swung to a profit in the latest quarter, posting earnings that beat analysts’ expectations by 4 cents a share. The company’s stock was up 19 cents at $21.34.
* Boeing said it signed a multimillion-dollar deal with two Chinese manufacturers to supply parts for its coming 7E7 Dreamliners and other jets. Boeing shares gained 9 cents to $48.75.
* FedEx rose 93 cents to $76.94 after raising its quarterly earnings outlook to $1.36 a share from a range of $1.20 to $1.30. The shipping giant cited an increase in sales of bundled office services.
Markets Roundup, C5
