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Stable jobless claims
help boost stocks
NEW YORK » A steady unemployment picture boosted Wall Street's confidence in the economy yesterday, lifting stocks moderately higher and giving the major indexes a gain for the shortened trading week.
Even though the Labor Department reported a slight rise in first-time jobless claims, the market wasn't alarmed, given that claims are still far lower than a year ago, and the number of people currently receiving unemployment insurance is at a three-year low.
The news was enough for buying to resume after Wednesday's selloff that was prompted by concerns over the Federal Reserve's interest rate policy.
"I think it took a little while to figure out what the interest rate policy would be, but even if interest rates double by year's end, the economy is strong enough and stable enough to easily manage that," said Kevin Caron, market strategist for Ryan, Beck & Co. "You've got a very strong set of economic data out there, earnings are good. It's a good picture all around."
However, trading was sluggish and volume was light in advance of the three-day weekend. The markets were to be closed today in observance of the national day of mourning for former President Reagan.
The Dow Jones industrial average gained 41.66, or 0.4 percent, to 10,410.10.
Broader stock indicators also closed higher. The Standard & Poor's 500 index was up 5.14, or 0.4 percent, at 1,136.47, and the Nasdaq composite index gained 9.26, or 0.5 percent, to 1,999.87.
All three indexes ended the week higher. The Dow was up 1.6 percent for the week, while the S&P 500 gained 1.2 percent -- the third straight week of gains for both. The Nasdaq reversed last week's slide, closing the week up 1.1 percent.
The Treasury's two-year note fell 2/32 to 991432, with its yield rising 3 basis points to 2.80 percent. The 10-year note gained 2/32 to 992032, with its yield slipping 1 basis point to 4.80 percent.
The Labor Department said there were 352,000 first-time unemployment claims last week, up 12,000 from the week before but down from 424,000 in the same week a year ago. In addition, the number of people drawing unemployment insurance fell by 106,000 to 2.88 million for the week ending May 29, the lowest level since May 2001.
With unemployment steady, investors felt that was one less reason to quickly ratchet up interest rates -- something Fed Chairman Alan Greenspan said this week he was willing to do if a rise in inflation warranted it. However, with inflationary data coming out next week, many investors held off from making large bets until they could get a better handle on what the Fed might do.
"I think now, the markets are going to sit back and take a look at the economic data over the next week or so," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons.
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