Thu, April 29, 2010
Business > Markets

US stocks climb on earnings, drop in jobless claims

2010-04-29 15:57:05 GMT2010-04-29 23:57:05 (Beijing Time)

Signs of an improving U.S. economy are helping send stocks higher for the second straight day.

The Labor Department says Thursday that initial claims for unemployment benefits fell last week. Dealmaking and strong corporate earnings reports are providing fresh evidence that the economy is on the mend.

Hewlett-Packard is buying Palm. Meanwhile Motorola, Time Warner Cable and Starwood Hotels all reported better-than-expected profits.

The Dow Jones industrial average is up 134.07, or 1.2 percent, at 11,179.34. The Standard & Poor's 500 index is up 15.88, or 1.3 percent, at 1,207.24, while the Nasdaq composite index is up 28.84, or 1.2 percent, at 2,500.57.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) — Signs of an improving U.S. economy are helping send stocks higher for the second straight day. Major indexes all rose in early trading Thursday.

The Labor Department said initial claims for unemployment benefits fell last week, though they did not drop quite as far as predicted. First-time claims dipped to 448,000, slightly above analysts' forecast of 445,000, according to Thomson Reuters.

Dealmaking and strong corporate earnings reports also provided fresh evidence that the U.S. economy is on the mend.

Hewlett-Packard Co. said late Wednesday it is buying smart phone maker Palm Inc. in an all-cash deal worth $1.4 billion. Acquisitions are a sign that the economy is recovering and companies are comfortable spending cash to build their businesses.

Earnings from companies like Motorola, Time Warner Cable and Starwood Hotels & Resorts also topped expectations, as have many other companies that reported first-quarter results in recent weeks.

"It just seems like the market is moving and moving and nothing is going to get in its way," said Steve Stahler, president of the Stahler Group Inc. in Baton Rouge, La.

Like many analysts, Stahler also has been expecting some pause in the market's ascent, which has been nearly unbroken since early February. Aside from the occasional one-day decline, however, there hasn't been a significant retreat since then.

That's relatively unusual for the stock market, whose upward climbs tend to be interrupted by occasional pullbacks. When stocks go in one direction for a sustained period of time, market watchers worry that investors are buying or selling indiscriminately.

In late morning trading, the Dow Jones industrial average rose 108.90, or 1 percent, to 11,154.17. The Standard & Poor's 500 index rose 14.15, or 1.2 percent, to 1,205.51, while the Nasdaq composite index rose 22.04, or 0.9 percent, to 2,493.77.

The upbeat signs in the U.S. economy come against a backdrop of ongoing debt concerns in Europe. European stock markets rose Thursday after two days of steep declines. On Wednesday Spain became the third European country this week to see its debt rating slashed by Standard & Poor's, following Greece and Portugal.

There are concerns that debt problems will spread across the continent and slow a global economic recovery. The most pressing problems are in Greece, which is still trying to tap a bailout package worth nearly $60 billion. European Union officials said again Thursday that Greece would have access to the money that will help it avoid defaulting on debt payments next month. The downgrades of Greek and Portuguese debt on Tuesday sent indexes worldwide tumbling.

Guy LeBas, chief fixed income strategist of Janney Montgomery Scott in Philadelphia, said the Greece crisis is "the tip of the iceberg for the European Union."

The debt crisis has the potential to drag down a European economic recovery and lead to a collapse of the euro, a currency shared by 16 member nations, LeBas said.

Earnings were the primary driver of stocks on Thursday, even as long-term concern remains about Europe.

Starwood Hotels & Resorts Worldwide Inc.'s profit jumped sharply as more people checked in its hotels, including the Sheraton, W, and Westin. Drug maker Bristol-Myers Squibb Co., phone maker Motorola Inc. and Time Warner Cable Inc. also reported stronger earnings.

Dow component ExxonMobil Corp.'s profit rose during the quarter, but fell short of expectations.

Starwood Hotels & Resorts rose $1.42, or 2.7 percent, to $54.69, while Bristol-Myers Squibb rose $1.40, or 5.8 percent, to $25.74. Motorola jumped 28 cents, or 4.1 percent, to $7.20 and Time Warner rose $3.03, or 5.7 percent, to $56.16.

Hewlett-Packard shares fell 51 cents to $52.77, while Palm surged $1.15, or 24.8 percent, to $5.78.

About three shares rose for every one that fell on the New York Stock Exchange, where volume came to 326.2 million shares, compared with 355.3 million traded at the same point Wednesday.

Bond prices traded in a narrow range. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.78 percent from 3.77 percent late Wednesday.

Gold dipped, while oil rose.

The Russell 2000 index of smaller companies rose 5.12, or 0.7 percent, to 727.51.

Overseas, Britain's FTSE 100 rose 0.4 percent, Germany's DAX index gained 0.7 percent, and France's CAC-40 rose 1.2 percent. Japan's market was closed for a holiday.


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