Stocks jump as better jobs data, gain in retail sales boost optimism about economic recovery

Stocks jump as jobs, spending data boost mood

NEW YORK — Stocks jumped in early trading Thursday after the market got encouraging news on jobs and consumer spending, two of the economy’s biggest trouble spots.

The Labor Department said the number of newly laid-off workers seeking unemployment benefits fell to 512,000 last week, the lowest level since January and less than the 523,000 economists had forecast.

Initial claims are considered a gauge of the pace of layoffs and an indication of employers’ willingness to hire new workers. The report offered investors fresh hope that the government’s monthly report on employment Friday may come in better than expected. Analysts project that the unemployment rate rose to 9.9 percent in October.

Meanwhile, retailers posted their second straight month of sales gains in October after more than a year of declines, providing hope that consumers are starting to spend a little more.

Technology stocks led the market’s gains after an upbeat forecast from Cisco Systems Inc. The technology giant said late Wednesday that it expects revenue to grow for the first time in a year during the period ending in January.

In midmorning trading, the Dow Jones industrial average surged 129.76, or 1.3 percent, to 9,931.90. The Standard & Poor’s 500 index rose 11.81, or 1.1 percent, to 1,058.31, while the Nasdaq composite index rose 35.59, or 1.7 percent, to 2,091.11.

Mixed messages from economic data in recent weeks have made it difficult for investors to get a sense of where the economy is headed, leading to increasingly choppy trading. The Federal Reserve pointed to hopeful signs on Wednesday but also said it would keep interest rates low for “an extended period” to help stimulate growth.

Low interest rates have been one of the drivers in the stock market’s more than 50 percent gain since March, encouraging investors to search for assets with higher yields than cash. But money managers also worry that the Fed’s pledge to keep rates low signals that the central bank believes the recovery is fragile.

The stock market initially cheered the Fed’s assessment of the economy on Wednesday, building on momentum stoked by better reports on activity in the service sector and private sector employment. Stocks failed to hold on to those gains, however, and the Dow finished with a gain of about 30 points, having risen as much as 156 points after the Fed announcement.

While the market is still able to respond positively to good news, it has become more difficult for the gains to stick. Swings between positive and negative territory have become the norm.

Investors can’t shake the fear that government stimulus programs have become a crutch for the economy and that the 3.5 percent growth in the third quarter won’t be sustainable once those stimulus measures are removed.

Among early retail sales reports, Costco Wholesale Corp. posted a 5 percent jump in sales at stores open at least a year, a key gauge of a retailer’s health. Limited Brands Inc. reported a bigger-than-expected sales decline.

Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 197.3 million shares compared with 223.4 million shares traded at the same point Wednesday.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.54 percent from 3.53 percent late Wednesday.

The dollar fell against other major currencies. Gold prices rose.

Light, sweet crude fell 60 cents to $79.80 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 10.06, or 1.8 percent, to 573.18.

Overseas, Asian markets fell overnight, while European shares recovered from early losses in afternoon trading and moved higher after central banks left their interest rates unchanged. The Bank of England also said it would pump more money into the economy after news last week that the country remains in recession.

Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index added 0.4 percent, and France’s CAC-40 gained 0.9 percent. Earlier Thursday, Japan’s Nikkei stock average fell 1.3 percent.