NJ.com: Good news on jobs gives added fuel to market rally
Published: Thursday, September 09, 2010, 8:10 PM
By: The Associated Press
Stocks extended their September rally Thursday following more encouraging news on the job market.
The Dow Jones industrial average rose 28 points after the Labor Department said first-time claims for unemployment benefits fell last week to the lowest level in two months.
In another hopeful sign on the economy, the trade deficit narrowed in July.
Stocks pared their gains in the afternoon after a report came out saying Deutsche Bank is considering raising new money through a stock sale in what could be another troubling sign for European banks.
Trading volume was very light. The jobs report came in much better than analysts had expected and added to other positive signals on the economy, including a pickup in job creation for August reported last week. Treasury prices and gold fell as investors found themselves with more appetite for risk.
“The employment report is still the king of kings,” said Edwin Denson, head of market strategy at Singer Partners LLC.
“The labor market is still the indicator, that if it’s positive, would give people the most comfort.”
Unemployment claims have still not fallen enough to suggest that widespread hiring is around the corner, but investors have taken solace in recent employment news that suggest the economy will continue to grow slowly during the rest of the year. Traders concerned about the potential for the economy to slide back into recession drove stocks lower through most of August.
“All we need is slightly good news … relative to expectations, and at this point expectations are relatively poor,” said Tyler Vernon, principal and portfolio manager at Biltmore Capital Advisors.
Stocks have rallied since the beginning of September on the improving outlook for the economy, and have risen in six out of the past seven days.
The Dow Jones industrial average rose 28.23, or 0.3 percent, to close at 10,415.24. The Dow had risen as much as 90 points earlier.
The Standard & Poor’s 500 index rose 5.31, or 0.5 percent, to 1,104.18, while the Nasdaq composite index rose 7.33, or 0.3 percent, to 2,236.20.
Rising stocks outpaced those that fell three to two on the New York Stock Exchange, where volume was extremely low at 840 million shares.
First-time claims for unemployment benefits fell to 451,000 last week, much better than the 470,000 expected by analysts polled by Thomson Reuters.
But that’s still well above the 400,000 level that economists say is a signal of strong economic growth and job creation.