Stocks surge on jobs, spending news
Markets today are way up on positive jobs and spending news. The Dow Jones Industrial Average again is approaching 10,000. Around noon Pacific time, it was up nearly 200 points, or 2 percent.
The number of people filing initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 512,000 in the week that ended Oct. 31, the Labor Department reported today.
It was the first decline in two weeks. It’s the fewest initial claims since early January. Initial jobless claims have been above 500,000 for 51 straight weeks.
The news was mixed, said Jennifer Lee, an economist for BMO Capital Markets. The decline in initial claims was “clearly good news,” but her enthusiasm was tempered by a rise in recipients of extended federal benefits.
The figures come one day before the Labor Department reports on the October employment rate. Economists surveyed by MarketWatch expect nonfarm payrolls to fall by 150,000 in October, and for the unemployment rate to rise to 9.9 percent.
“If the pace of decline from the peak is maintained, we are still some five months away from claims reaching the level that will signal net job growth,” wrote economists for RDQ Economics.
Economists surveyed by MarketWatch expected initial claims to fall to about 520,000. The level of initial claims in the week that ended Oct. 24 was revised up by 2,000 to 532,000.
The four-week average of initial claims fell by 3,000 to 523,750, also the lowest since January. The four-week average smoothes out quirks due to one-time events, such as bad weather, holidays or strikes.
Meanwhile, consumers, enticed by cooler weather and an improving economy, spent a little more in October, handing the retail industry its second consecutive monthly sales gain after more than a year of declines.
Even affluent shoppers, who had been tight with their purse strings since the financial meltdown ballooned last year, spent more for designer duds.
As merchants announced their figures Thursday, the results showed that shoppers still were not splurging, restrained by tight credit and a weak job market. But the improving figures and tone of the reports all pointed to sales momentum, encouraging as the industry heads into the holiday shopping season.
Among the bright spots were Costco Wholesale Corp.; TJX Cos., which operates T.J. Maxx and Marshalls; and Gap Inc., all of which reported solid gains for October. But the biggest surprise were improving sales at luxury retailers like Saks Inc., and Nordstrom Inc.
“Improved macro conditions are leading shoppers to spend more on discretionary purchases,” said Ken Perkins, president of retail research firm Retail Metrics.“This should bode well for Christmas.”
According to the International Council of Shopping Centers-Goldman Sachs tally, sales at stores opened at least a year rose 2.1 percent, compared with a 4.2 percent drop in October 2008.
The October results marked the industry’s strongest performance since July 2008 and beat estimates for a 1 percent gain. October’s gain followed a surprising 0.6 percent increase in September.
Sales at stores open at least a year are considered a key indicator of a retailer’s health.