Ford, job data boost stocks

Wall Street rallied Thursday after the government’s jobless claims data and Ford Motor’s first-quarter results helped re-inject some optimism about the economy into the market.

The Dow Jones industrial average rose more than 80 points as investors focused on Labor Department data showing weekly unemployment claims had dropped and on word that Ford had a $100-million profit in the first quarter.

The news allowed investors to look past the Commerce Department’s report that new-home sales fell in March to the lowest level in more than 16 years, a sign that the housing slump isn’t close to an end.

Investors also were able to set aside any concerns about another drop in factory orders for big-ticket manufactured goods and weak forecasts from Amazon.com and Starbucks.

Oil and other commodity prices fell as the dollar rose to its highest level against major currencies since January, which also helped boost stocks.

Sellers held sway early in the session, sending the Dow down nearly 57 points after the home sales report. But as the session wore on, the market righted itself, perhaps because there were no real surprises in the day’s negative news.

John Merrill, chief investment officer at Tanglewood Capital Management in Houston, said investors were seeing confirmation of many of the economic themes that have played out in recent months, with weakness in the financial, home building and automotive sectors and relative strength elsewhere.

“The earnings picture is not so bleak as people thought it was going to be,” he said. “There’s been so much talk of the spillover from the credit crunch and home building into the real economy, and that just doesn’t seem to have happened.”

The Dow rose 85.73 points, or 0.7%, to 12,848.95.

Broader stock indicators also gained. The Standard & Poor’s 500 index rose 8.89 points, or 0.6%, to 1,388.82, and the Nasdaq composite advanced 23.71 points, or 1.0%, to 2,428.92.

Bond prices declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.83% from 3.73% on Wednesday.

The dollar rose for the second straight day, regaining ground from its record low against the euro Tuesday amid rising expectations that the Federal Reserve will pause in its string of interest-rate cuts after its meeting next Wednesday. The euro brought $1.569 in late New York trading, down from $1.59 on Wednesday.

The greenback’s advance sent commodity prices falling.

A drop in oil prices particularly reassured Wall Street. Crude’s surge toward $120 a barrel earlier this week compounded already rising concerns about inflation and its effect on consumer spending.

Light, sweet crude fell $2.24 to settle at $116.06 on the New York Mercantile Exchange. Gold fell $19.40 to $886.80.

The Labor Department’s report that claims for unemployment benefits declined by 33,000 last week to 342,000 came as a surprise after economists predicted claims would rise by 3,000. The notion that unemployment might be contained appeared to damp some concern about the economy.

But unwelcome news came from the Commerce Department, which said new-home sales fell by 8.5% in March to a seasonally adjusted annual rate of 526,000 units -- the slowest pace since October 1991. Also, the median price of a new home showed the sharpest year-over-year decline in nearly four decades.

Orders to factories for durable goods -- big-ticket items such as refrigerators, cars and computers -- fell for a third straight month in March, marking the longest sustained pullback since 2001.

Amazon.com had worried investors over the strength of its profit margins, while Starbucks warned that its second-quarter profit would probably fall short of Wall Street’s expectations because of weak consumer spending.

Their forecasts, delivered after the closing bell Wednesday, touched off unease over the prospects for the consumer. Amazon fell $3.31, or 4.1%, to $77.69, and Starbucks dropped $1.86, or 11%, to $15.99.

But Ford said strong results from Europe and South America helped make up for a slower U.S. economy. The No. 2 U.S. automaker’s performance represented its first profitable quarter since the second quarter of 2007. Ford rose 88 cents, or 12%, to $8.40.

3M, maker of Scotch tape and Post-It notes, fell $1.50 to $79.13 after reporting that first-quarter profit fell 28% from a year earlier, when it benefited from the sale of a pharmaceutical business in Europe.

Motorola slid 30 cents, or 3.1%, to $9.25 after reporting that its first-quarter loss widened after a 39% decline in its mobile business.