Drop in jobless claims cheers investors
NEW YORK – Wall Street rose Thursday as investors bought back into stocks after two days of losses, encouraged by a drop in unemployment claims and a better-than-expected sales performance by discount retailers.
Although last week the Labor Department said the four-week average of initial unemployment claims rose to a 2 1/2-year high, investors were pleased to hear that claims last week fell by more than expected.
And while many retailers – from Gap Inc. to Saks Inc. – said Thursday that March sales slid as consumers grew more frugal, Wall Street was encouraged that other companies are weathering the economic weakness. Discounters Wal-Mart Stores Inc. and Costco Wholesale Corp. reported sharp increases in March sales and indicated they expect sales to keep rising.
“The jobless claims snapped back down following the sharp rise last week. Combined with the news from Wal-Mart, it suggests that the consumer may be able to muddle through. That’s providing some support for an otherwise strained market,” said Alan Gayle, senior investment strategist for RidgeWorth Capital Management.
Questions about the health of the global financial system ahead of next week’s bank earnings, however, continue to provide a troubling backdrop for the market. Lehman Brothers Holdings Inc. disclosed in a regulatory filing Wednesday that it liquidated three funds because of the tight credit markets and brought the assets of those funds, valued at $1 billion, onto its books Feb. 29. The investment bank said it also purchased deteriorated assets valued at $800,000 from other distressed funds.
“We think everything is better, and then we get another surprise. Every credit rock we turn over has something else crawl out from under it,” Gayle said.
The Dow Jones industrial average rose 54.72, or 0.44 percent, to 12,581.98. Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 6.06, or 0.45 percent, to 1,360.55, and the Nasdaq composite index rose 29.58, or 1.27 percent, to 2,351.70.
Overseas, Japan’s Nikkei stock average dropped 1.27 percent. Britain’s FTSE 100 fell 0.31 percent, Germany’s DAX index fell 0.25 percent, and France’s CAC-40 fell 0.32 percent.