Dow now at 11,185, up 140 points.
NEW YORK (AP) — More signs of an improving U.S. economy lifted
stocks for a second straight day.
The Dow Jones industrials rose 140 points Thursday after the Labor
Department said initial claims for unemployment benefits fell last
week. First-time claims dipped to 448,000, slightly above analysts’
forecast of 445,000, according to Thomson Reuters.
Dealmaking and strong corporate earnings reports also provided
fresh evidence that the U.S. economy is healing.
Hewlett-Packard Co. said late Wednesday it is buying smart phone
maker Palm Inc. in an all-cash deal worth $1.4 billion.
Acquisitions are a sign that the economy is recovering and
companies are comfortable spending cash to build their
businesses.
“Business are in a very strong position financially,” said Doug
Lockwood, chief investment officer at Cornerstone Wealth Management
in Auburn, Ind. Companies have built up big cash reserves that can
not only go toward deals, but also eventually hiring back workers,
Lockwood said.
Companies including Motorola, Time Warner Cable and Starwood Hotels
& Resorts reported earnings that topped analysts’ expectations, as
have many other companies that announced first-quarter results in
recent weeks.
“It just seems like the market is moving and moving and nothing is
going to get in its way,” said Steve Stahler, president of the
Stahler Group Inc. in Baton Rouge, La.
Over the past two days, the Dow has recovered most of its 213-point
loss it posted on Tuesday in response to growing concerns about
European countries’ debt problems. Some analysts said Tuesday that
investors were overreacting to the situation in Europe. But they
also acknowledged the market was due for a pullback after moving
steadily higher for months. When stocks go in one direction for a
sustained period of time, market watchers worry that investors are
buying or selling indiscriminately.
In afternoon trading, the Dow rose 140.41, or 1.3 percent, to
11,185.68. The Standard & Poor’s 500 index rose 16.17, or 1.4
percent, to 1,207.53, while the Nasdaq composite index rose 33.62,
or 1.4 percent, to 2,505.35.
European stock markets rose Thursday after two days of steep
declines. On Wednesday Spain became the third European country this
week to see its debt rating slashed by Standard & Poor’s, following
Greece and Portugal.
There are concerns that debt problems will spread across the
continent and slow a global economic recovery. The most pressing
problems are in Greece, which is still trying to tap a bailout
package worth nearly $60 billion. European Union officials said
again Thursday that Greece would have access to the money that will
help it avoid defaulting on debt payments next month. The
downgrades of Greek and Portuguese debt on Tuesday sent indexes
worldwide tumbling.
Guy LeBas, chief fixed income strategist of Janney Montgomery Scott
in Philadelphia, said the Greece crisis is “the tip of the iceberg
for the European Union.”
The debt crisis has the potential to drag down a European economic
recovery and lead to a collapse of the euro, a currency shared by
16 member nations, LeBas said.
Earnings were the primary driver of stocks on Thursday, even as
long-term concern remains about Europe.
Starwood Hotels & Resorts Worldwide Inc.’s profit jumped sharply as
more people checked in its hotels, including the Sheraton, W, and
Westin. Drug maker Bristol-Myers Squibb Co., phone maker Motorola
Inc. and Time Warner Cable Inc. also reported stronger
earnings.
Dow component ExxonMobil Corp.’s profit rose during the quarter,
but fell short of expectations.
Starwood Hotels & Resorts rose $3.18, or 6 percent, to $56.45,
while Bristol-Myers Squibb rose $1.23, or 5.1 percent, to $25.57.
Motorola jumped 22 cents, or 3.2 percent, to $7.14 and Time Warner
rose $3.33, or 6.3 percent, to $56.46.
Hewlett-Packard shares fell 39 cents to $52.90, while Palm surged
$1.16, or 25 percent, to $5.79.
About three shares rose for every one that fell on the New York
Stock Exchange, where volume came to 612.7 million shares, compared
with 710.5 million traded at the same point Wednesday.
Bond prices traded in a narrow range. The yield on the benchmark
10-year Treasury note, which moves opposite its price, was
unchanged at 3.77 percent, compared with late Wednesday.
Gold dipped, while oil rose.
The Russell 2000 index of smaller companies rose 8.70, or 1.2
percent, to 731.09.
Overseas, Britain’s FTSE 100 rose 0.6 percent, Germany’s DAX index
gained 1 percent, and France’s CAC-40 rose 1.4 percent. Japan’s
market was closed for a holiday.
