Market sees boost amid job shortage

NEW YORK – A steady unemployment picture boosted Wall Street’s confidence in the economy Thursday, lifting stocks moderately higher and giving the major indexes a gain for the shortened trading week.

Even though the Labor Department reported a slight rise in first-time jobless claims, the market wasn’t alarmed, given that claims are still far lower than a year ago, and the number of people currently receiving unemployment insurance is at a three-year low.

The news was enough for buying to resume after Wednesday’s selloff 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 in advance of the three-day weekend. The markets were to be closed today in observance of the national day of mourning for former President Reagan.

The Dow Jones industrial average gained 41.66, or 0.4 percent, to 10,410.10.

Broader stock indicators also closed higher. The Standard & Poor’s 500 index was up 5.14, or 0.4 percent, at 1,136.47, and the Nasdaq composite index gained 9.26, or 0.5 percent, to 1,999.87.

All three indexes ended the week higher. The Dow was up 1.6 percent for the week, while the S&P 500 gained 1.2 percent – the third straight week of gains for both. The Nasdaq reversed last week’s slide, closing the week up 1.1 percent.

The Labor Department said there were 352,000 first-time unemployment claims last week, up 12,000 from the week before but down from 424,000 in the same week a year ago. In addition, the number of people drawing unemployment insurance fell by 106,000 to 2.88 million for the week ending May 29, the lowest level since May 2001.

With unemployment steady, investors felt that was one less reason to quickly ratchet up interest rates – something Fed Chairman Alan Greenspan said this week he was willing to do if a rise in inflation warranted it; however, with inflationary data coming out next week, many investors held off from making large bets until they could get a better handle on what the Fed might do.

“I think now, the markets are going to sit back and take a look at the economic data over the next week or so,” said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. “There’s going to be inflation. The key is to get a feel for just how strong it’s coming on, and how much the Fed will have to respond.”

Target Corp. gained 12 cents to $45.75 after it announced the sale of its struggling Marshall Field’s department store division to May Department Stores Co. for $3.24 billion. May was down a penny at $28.87.

H&R Block Inc. rose 32 cents to $47.15 on the strength of its latest quarterly earnings report. The company beat Wall Street expectations by 7 cents per share, with higher per-client fees more than offsetting an overall drop in customers.

National Semiconductor Corp. swung to a profit in the latest quarter, posting earnings that beat analysts’ expectations by 4 cents per share; however, the company’s outlook for the current was considered somewhat meager. National Semiconductor was up 19 cents at $21.34.

Boeing Co. said it has signed a multimillion dollar deal with two Chinese manufacturers to supply parts for its upcoming 7E7 Dreamliners and other jets. Boeing gained 9 cents to $48.75.

FedEx Corp. rose 93 cents to $76.94 after raising its quarterly earnings outlook to $1.36 per share from a range of $1.20 to $1.30. The shipping giant cited an increase in sales of bundled office services.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 1.51 billion shares, compared to 1.61 billion on Wednesday.

The Russell 2000 index of smaller companies was up 0.54, or 0.1 percent, at 569.12.

Overseas, Japan’s Nikkei stock average rose 1.1 percent. In Europe, Britain’s FTSE 100 slid 0.1 percent for the session, Germany’s DAX index gained 0.6 percent, and France’s CAC-40 closed up 0.3 percent.