Star-Bulletin news services
Drop in jobless claims
gives market a boost
NEW YORK >> Wall Street pushed higher today as a drop in jobless claims and an upbeat outlook from IBM recharged investors' hopes that the economy was improving.
Analysts said many investors were largely brushing off mixed economic data in favor of news suggesting rebounding corporate profits by year's end.
"It's three steps forward, two steps back," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray. "Investors are looking towards the second half of the year and ignoring what will be an average second quarter."
But he added, "caution is still the watchword. People are expecting the market to pull back because it had a pretty dynamic move in the last two months."
Advancing issues outnumbered decliners 8 to 5 on the New York Stock Exchange. Volume was moderate. The Dow Jones industrial average closed up 65.32, or 0.8 percent, at 8,713.14, nearly wiping out a two-day loss of 78 points.
The broader market also advanced. The Nasdaq composite index rose 16.48, or 1.1 percent, to 1,551.38. The Standard & Poor's 500 index gained 7.39, or 0.8 percent, to 946.67. The Russell 2000 index rose 2.61, or 0.6 percent, to 422.05.
The price of the Treasury's 10-year note was down 1/32 point, while its yield fell to 3.52 percent from 3.53 percent from yesterday. Two-year Treasury notes were down 3/32 point and yielded 1.44 percent, up from 1.39 percent yesterday.
The Labor Department reported that new applications for jobless benefits fell by a seasonally adjusted 13,000 to 417,000 last week, the third straight week of declines. Analysts were expecting claims to rise.
Separately, the department said wholesale prices plunged by a record 1.9 percent in April, compared to a 1.5 percent gain in the previous month.
Another report highlighted a sluggish manufacturing sector, however. The Federal Reserve reported that production at the nation's factories, mines and utilities fell by 0.5 percent in April for the second month in a row. Economists were forecasting a 0.4 percent decline.
Investors have sent stocks higher in recent weeks on encouraging earnings, but now they are looking for strong signs of an economic rebound by year's end, analysts said.
"While things aren't great yet, they are starting to look up," said Ed Peters, chief investment officer at PanAgora Asset Management Inc.
IBM, a Dow component, rose $1.20 to $89.90 after the company's chief executive said demand in the technology sector is stabilizing.
Computer Associates climbed $2.07, or 11.4 percent, to $20.26 after the technology company reported quarterly earnings that beat Wall Street's estimates; however, it also disclosed it had received two more federal subpoenas in connection with its accounting practices.
Decliners included Target, which fell $1.47 to $34.46, after the retailer reported first-quarter earnings that fell a penny short of analysts' expectations.
Overseas, Japan's Nikkei stock average finished 1.5 percent lower. In Europe, France's CAC-40 gained 1.2 percent, Britain's FTSE 100 rose 0.9 percent and Germany's DAX index climbed 2.2 percent.
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