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US stocks climb after drop in jobless claims May 1, 2009

Good morning friends.  Good news for those who have a stocks.  US stocks climb after drop in jobless claims. Investors found more reason to  be hopeful about the US economy.

In a welcome surprise for Wall Street on Thursday, the Labor Department said initial claims fell last week by 14,000 to 631,000. Economists had predicted an increase.

Not all data were positive – continuing jobless claims jumped to a new record, and the government also reported a slightly larger-than-expected decline in personal spending and incomes. Still, the pullback in spending was not a shock, particularly after two months of gains.

Thursday’s readings bolstered investors’ growing belief that the US economy, while not yet healthy, is nearing a bottom. The stock market surged more than 2 per cent Wednesday after the Federal Reserve said the contraction appears to be slowing.

Investors know the stock market usually rebounds before the economy does, and they do not want to miss out on a rally. The Dow Jones industrial average is already up 25 per cent from its 12-year low in early March.

“Recovery seems to be in the air, and the market is now a forward-looking market,” said Peter Cardillo, chief market economist at the brokerage house Avalon Partners Inc. “A feeling of being left behind seems to be pushing the market higher.”

Earnings reports have also been beating expectations over the past few weeks. On Thursday, many companies reported profit declines – including Dow Chemical, Newell Rubbermaid and Newmont Mining – but their results topped analysts’ forecasts. And Motorola Inc.’s first-quarter loss was smaller than analysts predicted.

In the first half-hour of trading, the Dow Jones industrial average rose 82.91, or 1 per cent, to 8,268.54.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 7.86, or 0.9 per cent, to 881.50, and the Nasdaq composite index rose 20.93, or 1.2 per cent, to 1,732.87.  – The Economic Times