Jobless-claims drop rouses stocks

Friday, May 3, 2013

NEW YORK - Stocks rose Thursday after unemployment claims fell to a five-year low. On Wednesday it was just the opposite: The market slumped after companies added just 119,000 jobs in April, the fewest in seven months, according to payroll processor ADP.

Stocks could swing again today when the government’s closely watched monthly employment report is released.

“Everyone is looking to the April jobs numbers,” said Tyler Vernon, chief investment officer at Biltmore Capital. “People are more confident that it was an anomaly last month and are looking for some bigger numbers.”

Economists forecast that employers added 160,000 jobs last month.

Signs of increased hiring have supported this year’s surge in stocks and pushed the market to record highs. The run-up has started to falter in recent weeks on concerns that the global economy is slowing. More jobs should spur consumer spending, a driver of U.S. economic growth.

The Dow Jones industrial average rose 130.63 points to 14,831.58 on Thursday, an increase of 0.9 percent. The index lost 138 points Wednesday.

The Standard & Poor’s 500 index climbed 14.89 points, or 0.9 percent, to 1,597.59, also recovering almost all of its losses from a day earlier.

Three stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was slightly below average at 3.4 billion shares.

Applications for unemployment benefits fell last week to 324,000, the fewest since January 2008, the Labor Department reported before the market opened.

The outlook for global growth also got a lift when the European Central Bank cuts its benchmark interest rate a quarter of a percentage point to 0.5 percent.

The euro fell a penny against the dollar to $1.3060. The price of gold rose $21.40, or 1.5 percent, to $1,467.60 an ounce. The price of crude oil rose $2.96, or 3.3 percent, to $93.99 a barrel.

Higher profits from CBS, Facebook and other companies also lifted stocks Thursday.

Broadcaster CBS reported a 22 percent jump in first quarter earnings as big events like the Super Bowl pushed advertising revenue higher. Its stock rose 95 cents, or 2 percent, to $47.35.

Facebook gained $1.54, or5.6 percent, to $28.98 after its first-quarter revenue rose 38 percent, surpassing Wall Street expectations.

Nearly a third of the company’s advertising revenue came from mobile devices, a greater share than analysts had expected.

The social-networking site bucked the trend for companies reporting in the first quarter. Most are exceeding analysts’ expectations on earnings but falling short on revenue.

“If we continue to see several more quarters like this, investors would start to get nervous,” said Andrew Milligan, head of global strategy at Standard Life Investments. He said growth needs to pick up in the major export markets for U.S. companies to maintain earnings growth.

Technology stocks have surged in the past two weeks after lagging behind the S&P 500 in the first three months of the year.

Gains for technology companies helped push the technology-heavy Nasdaq composite higher.

The index advanced 41.49 points, or 1.3 percent, to 3,340.62.

In government bond trading, the yield on the 10-year note was unchanged at 1.63 percent, matching its low for the year. Bonds have gained as inflation remains tame.

Business, Pages 30 on 05/03/2013