Star-Bulletin news services
Jobless claims report
boosts market gains
NEW YORK >> A report suggesting that layoffs might be stabilizing helped reassure Wall Street yesterday and sent stocks moderately higher, although the gains were limited by news of a sluggish gross domestic product.
Analysts said much of the advance was also a bounceback from Wednesday's sharp decline after the Federal Reserve voted to cut interest rates by a quarter-percentage point. Since the reduction was widely expected, traders were now making up for Wednesday's overreaction.
"It's a directionless day in the aftermath of the Fed cut," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "Investors are looking forward to the end of the quarter and dreading the preannouncement season," when companies issue earnings warnings.
The Dow Jones industrial average closed up 67.51, or 0.8 percent, at 9,079.04, having fallen 98 points Wednesday.
The broader market also finished higher. The Nasdaq composite index advanced 31.35, or 2 percent, to 1,634.01. The Standard & Poor's 500 index rose 10.50, or 1.1 percent, to 985.82.
Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Volume was moderate at 1.38 billion shares, compared with 1.45 billion traded Wednesday.
The Russell 2000 index, which tracks smaller company stocks, rose 6.69, or 1.5 percent, to 449.90. The NYSE composite index gained 32.49 to 5,555.84. The American Stock Exchange composite index rose 7.01 to 968.12.
The Commerce Department reported yesterday that the GDP rose at an annual rate of 1.4 percent during the first quarter. That was lower than the 1.9 percent reading estimated a month ago.
But the Labor Department said new claims for unemployment benefits fell last week by a seasonally adjusted 22,000 to a three-month low of 404,000, suggesting that layoffs may be stabilizing.
"They were sort of in line as expected," Palazzi said. "The market is gingerly moving along with healthy skepticism. ... We've had such great gains, there's more than a bit of caution."
Stephen Massocca, president of Pacific Growth Equities, agreed.
"Had those reports delineated a clear direction for the economy it would have been meaningful" for the markets, he said. "But it didn't really. ... The big new items the market is waiting to hear about are how poorly or good companies did in the second quarter. That will begin in earnest after the July 4th holiday."
Gainers included Intel, which rose 59 cents to $20.63, and IBM, which advanced $1.86 to $84.35.
American International Group rose 55 cents to $56.20 after the company said it would buy General Electric's Japanese insurance operations as well as its U.S. auto and home business for about $2.15 billion. GE gained 8 cents to $29.15.
Decliners included GlaxoSmithKline, which fell 4 cents to $41.35, although the British pharmaceutical company said it received an approval letter from the Food and Drug Administration for its antidepressant drug Wellbutrin.
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