U.S. stocks rise after unemployment claims report
5/10/2012NEW YORK — Stocks rose today, putting the Dow Jones industrial average on track to break a six-day losing streak.
The gains came after the government said claims for unemployment benefits edged lower last week. Investors had been worried that a strong start to hiring this year was coming to an end. The better jobs numbers suggest that hiring will continue to improve.
At midday, the Dow was up 36 points at 12,871, after rising as much as 96 points in the morning. The Standard & Poor’s 500 index rose four points 1,359.
The tech-heavy Nasdaq composite index fell seven points to 2,927. Cisco Systems, one of the 30 stocks in the Dow average, plunged almost 11 percent after the networking giant warned that technology spending appeared to be slowing down and that its revenue would rise much less than analysts had been expecting this quarter. Hardware maker Oracle fell almost 4 percent.
Before today, the Dow had fallen for six days in a row, its longest losing streak since August. Investors were encouraged by the Labor Department’s report that applications for unemployment benefits dropped 1,000 to 367,000 in the week ending May 5. The four-week average, which economists watch more closely, fell 5,250 to 379,000. When that figure remains consistently below 375,000, it suggests that job growth is strong enough to lower the unemployment rate.
The numbers could dispel nascent fears that that strongest yearly start for hiring since the recession ended 2009 was sputtering.
Stocks also benefited from news that Spain would take over Bankia SA, the country’s fourth-largest bank, which has high exposure to bad property loans. The government is hoping to convince investors that Spain won’t need a bailout.
“Europe’s problems are by no means being solved. But the feeling that there is some support there probably helps sentiment a little bit,” said Ed Hyland, a global investment specialist with J.P. Morgan Private Bank.
The news helped U.S. financial stocks, which would be vulnerable to an increase in financial stress in Europe. Citigroup rose 1.6 percent and JPMorgan Chase rose almost 1 percent.
European stocks rose. Spain’s IBEXC 35 index jumped 3.4 percent on the Bankia news and a drop in Spain’s borrowing costs. Britain’s FTSE 100 rose 0.2 percent, Germany’s DAX rose 0.6 percent.
Other U.S. stocks on the move included:
— Pfizer rose 2 percent after the drugmaker got preliminary approval for an arthritis drug.
— Avon fell 2 percent after beauty products maker Coty Inc. raised its offer to buy Avon but also said it will withdraw the latest bid if it doesn’t get a response by the close of business Monday.
— Kohl’s fell 3 percent after price-cutting led to a 23 percent drop in its first-quarter profit.
Oil prices rose 31 cents to $97.12 per barrel.