By Renae Merle
Washington Post Staff Writer
Thursday, April 16, 2009 4:30 PM
After languishing most of the day, stocks closed higher this afternoon as investors shrugged off weak economic data, including signs the housing market continues to suffer.
The blue-chip Dow Jones industrial average was up 1.2 percent, or 96 points, while the broader Standard & Poor's 500 index was up 1.6 percent, or 13 points. The tech-heavy Nasdaq composite index climbed 2.7 percent, or 44 points.
Technology stocks helped lead the rally, including cellphone maker Nokia, which beat expectations despite reporting a 90 percent drop in profit. Its stock was up 11.4 percent. Google, which is scheduled to release earnings after the markets close, was up 2.4 percent.
Arlington-based language instruction company Rosetta Stone surged nearly 40 percent during its initial public offering today.
Stocks are now far from the 12-year lows reached in early March. "This market simply does not want to break down regardless of weak fundamentals. The rally will likely begin to accelerate from here," said Thomas Francis Nordby, a futures analyst with LaSalle Futures in Chicago.
Investors faced mixed economic data today. The number of workers requesting unemployment benefits fell 53,000 last week to 610,000, according to government data released this morning. That was a bigger drop than expected by analysts. But jobless claims remain at elevated levels -- now more than 6 million on continuing claims -- and are likely to resume their upward march, analysts said.
And the news out of the housing sector remains dire. New home construction fell 11 percent last month after surging unexpectedly in February. Analysts had hoped to see signs that the housing market was already starting to stabilize.
But the housing market is still on track to hit bottom within the next six to 12 months, said Philip Orlando, chief equity market strategist at Federated Investors. "It means that the inventories in the housing market are going to get back in line that much more quickly. Builders are contributing that much less new product into the inventory overhang," he said.
Investors who have been expecting a dismal earnings season got another positive report from the financial sector today as J.P. Morgan Chase became the latest bank to report solid earnings. Chase's profits fell 10 percent during the first quarter but still beat analysts' expectations, sending the company's stock up 2.1 percent.
This follows a report from Goldman Sachs earlier this week showing a $1.6 billion profit and Wells Fargo's forecast that it would record a $3 billion profit during its first quarter. These reports have stoked hopes that some banks are beginning to overcome the worst of the financial crisis.
"We went into this earnings season with a lot of trepidation; so far, it's not as bad as we thought it was going to be," Orlando said. Goldman Sachs, Wells Fargo and Chase "have helped set a much more constructive tone."
But not all earnings reports were positive today. Southwest Airlines tumbled 8 percent after reporting a $91 million first-quarter loss.
Overseas stocks were up. London's FTSE was up 2.1 percent, and the Dax in Germany was up 1.3 percent. Japan's Nikkei was flat, up 0.1 percent.