Market rises after drop in jobless claims
NEW YORK » Wall Street rallied yesterday after the government's jobless claims data and Ford Motor Co.
's first-quarter results helped reinject some optimism about the economy into the market.
The Dow Jones industrial rose more than 80 points as investors focused on the Labor Department data showing weekly unemployment claims dropped and word that Ford had a $100 million profit in the first quarter. The news allowed investors to look past the Commerce Department's report that new home sales fell in March to the lowest level in more than 16 years, a sign that the housing slump isn't close to an end.
Investors were also able to set aside any concerns about another drop in factory orders for big-ticket manufactured goods and weak forecasts from Amazon.com Inc. and Starbucks Corp. Meanwhile, oil and other commodities prices fell as the dollar rose to its highest level against major currencies since January, which also helped boost stocks.
"The earnings picture is not so bleak as people though it was going to be," said John Merrill, chief investment officer at Tanglewood Capital Management in Houston. "There's been so much talk of the spillover from the credit crunch and homebuilding into the real economy and that just doesn't seem to have happened."
The Dow rose 85.73, or 0.67 percent, to 12,848.95.
Broader stock indicators also gained. The Standard & Poor's 500 index rose 8.89, or 0.64 percent, to 1,388.82, and the Nasdaq composite index advanced 23.71, or 0.99 percent, to 2,428.92. The Russell 2000 index of smaller companies rose 8.96, or 1.27 percent, to 717.07.
Bond prices declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.83 percent from 3.74 percent on Wednesday.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 4.34 billion shares, up from 3.81 billion on Wednesday.
The dollar rose for the second straight day, regaining ground from its record low against the euro on Tuesday amid rising expectations that the Federal Reserve will pause in its string of interest rate cuts following its meeting next Wednesday. The euro brought $1.5686 in late New York trading, down from $1.5896 Wednesday and $1.6018 on Tuesday.
The greenback's advance sent commodities prices falling; hard assets like oil and gold tend to rise when the dollar is falling, so they reversed course Thursday as the U.S. currency regained some strength.
Crude's surge toward $120 a barrel earlier this week compounded already rising concerns about inflation and its impact on consumer spending. Light, sweet crude fell $2.24 to settle at $116.06 on the New York Mercantile Exchange.
Amazon had worried investors over the strength of its profit margins, while Starbucks warned that its second-quarter profit will likely fall short of Wall Street's expectations because of weak consumer spending. Amazon fell $3.31, or 4.1 percent, to $77.69, while Starbucks dropped $1.86, or 11 percent, to $15.99.
But Ford said strong results from Europe and South America helped make up for a slower U.S. economy. Ford rose 88 cents, or 12 percent, to $8.40.