Stocks rise moderately after unexpected drop in weekly jobless claims; retail sales mixed

Stocks trade moderately higher on jobs data

NEW YORK — Stocks are moderately higher in early trading as investors weigh an unexpected drop in weekly unemployment claims against mixed sales reports from retailers.

Government data show that the number of unemployed workers continuing to receive benefits unexpectedly dropped for the first time in 20 weeks. New jobless claims also fell, dropping 4,000 to 621,000.

Many U.S. retailers, including Costco Wholesale and Hot Topic, are reporting bigger-than-expected sales drops in May as shoppers keep their budgets tight.

In early trading, the Dow Jones industrial average is up 13 at 8,688. The Standard & Poor’s 500 index is up 3 at 935, and the Nasdaq composite index is up 9 to 1,835.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — U.S. stock futures are indicating a slightly higher opening Thursday as a pleasant surprise on the labor market is helping to offset weak retail sales reports.

Government data shows that the number of unemployed workers continuing to receive benefits unexpectedly dropped for the first time in 20 weeks. New jobless claims also declined, falling to 621,000 from the previous week’s revised figure of 625,000, nearly matching analysts’ expectations.

More good news for the jobs market came from Wal-Mart Stores Inc., which said it plans to hire about 22,000 people as it opens 150 new or expanded stores in the U.S. this year.

The reports came a day ahead of the government’s crucial tally of monthly job losses. Unemployment has been one of the market’s biggest concerns throughout the recession.

While the jobs data was certainly encouraging, disappointing reports from retailers are likely to weigh on the market Thursday.

Many U.S. retailers, including Costco Wholesale and Hot Topic, are reporting bigger-than-expected sales declines in May as shoppers keep their budgets tight. One factor that is likely weighing on results: a year ago, sales benefited from fiscal stimulus checks.

Consumer spending accounts for more than two-thirds of U.S. economic activity, so how retailers are faring says a lot about the state of the economy.

Ahead of the market’s open, Dow Jones industrial average futures rose 26, or 0.3 percent, to 8,685. Standard & Poor’s 500 index futures gained 4.70, or 0.5 percent, to 936.40, while Nasdaq 100 index futures added 1.75, or 0.1 percent, to 1,479.25.

The day’s news presents a familiar quandary for investors who have been grappling with mixed signals on the economy lately. While some reports indicate the economy’s decline is slowing, others show that companies and consumers are still feeling the pain of a deep recession.

Many fear that the “green shoots” of economic growth that were the impetus for the market’s spring rally have yet to really bloom, which could indicate a slower, less robust recovery than originally hoped.

The market’s more than 30-percent advance since early March was driven in large part by economic data that beat analysts’ and investors’ expectations. But those expectations were already very low. Now that the economy has shown small signs of improvement, the market’s expectations are rising and investors are now anxious for more clear indications of growth.

On Wednesday, investors broke a four-day streak of gains and sold stocks on worse-than-expected reports on factory orders and the services sector. The S&P 500 index dipped 1.4 percent, while both the Dow and the Nasdaq composite fell less than 1 percent.

Investors are likely to stay keenly focused on a number of areas that have been cause for concern as of late: consumer spending, unemployment, rising oil and commodity prices and a weakening dollar.

The dollar has fallen steadily since early March when the stock market’s rally began as investor appetite for riskier assets increased. A falling dollar is worrisome because it has the potential to trigger inflation and lessens the buying power of consumers.

On Thursday, however, the dollar rebounded against the euro and the British pound after both the Bank of England and the European Central Bank maintained cautious stances on the economy and kept their benchmark interest rates at historical lows. Central banks around the world, including in the U.S., have slashed interest rates in an effort to keep borrowing costs low and spur the economy. The cuts, however, tend to weaken a country’s currency.

Both gold and oil prices resumed their three-month climbs following sharp pullbacks on Wednesday.

Light, sweet crude added $1.96 to $68.08 a barrel in electronic trading on the New York Mercantile Exchange.

Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.63 percent from 3.54 percent. Last week, the 10-year yield surged to a six-month high of 3.75 percent on worries over mounting U.S. debt loads. Rising long-term yields also have investors worried. Interest rates on mortgages and other consumer loans that are tied to the 10-year Treasury note could subsequently rise and ratchet up borrowing costs.

Overseas, Japan’s Nikkei stock average fell 0.8 percent and Hong Kong’s Hang Seng index slipped 0.4 percent. In European trading, Britain’s FTSE 100 pared early gains after the interest rate decisions, recently adding 0.1 percent in afternoon trading. Germany’s DAX index rose 0.6 percent and France’s CAC-40 gained 0.8 percent.