Markets Flat on Better-Than-Expected Jobless Claims
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Thursday, July 9, 2009; 4:56 PM
Stocks made modest gains today, including a rally in energy and financial shares, after a better-than-expected labor report.
The Dow Jones industrial average rose 4.76, or less than 0.1 percent, to close at 8183.17, while the broader Standard & Poor's 500-stock index gained 3.12, or 0.4 percent, to finish at 882.68. The technology-heavy Nasdaq rose 5.38, or 0.3 percent, to 1752.55.
Shares of J.P.Morgan Chase jumped nearly 3 percent, to $33.62, while Bank of America gained more than 1 percent. Goldman Sachs climbed 3.4 percent.
Despite the gains, the major indexes appeared headed toward another round of weekly losses after selling off earlier this week amid concerns that the economic recovery could take longer than expected.
Investors appeared relieved today by a second-quarter earnings report from Alcoa late yesterday that kicked off what is expected to be a brutal earnings season.
The aluminum company swung to a loss of $454 million during the quarter, but that was not as steep as some analysts had expected. The company's stock fell 23 cents, or 2.4 percent, to $9.23.
"Alcoa achieved great success in slashing costs in [the second quarter], and we believe that the company can do more," Luther Lu, an analyst for Friedman, Billings, Ramsey, said in a research note this morning.
In economic news, the number of workers making initial applications for unemployment insurance fell 52,000 last week to a seasonally adjusted 565,000, according to the Labor Department report. That was a steeper drop than analysts had been expecting and the lowest weekly reading since early January. The number of workers filing jobless claims remains historically high, and those needing assistance for an extended period jumped again.
As the earnings season starts, investors are looking for clues for whether companies can beat dismal expectations. Cost cutting will boost some corporate balance sheets, but investors are also looking for stronger revenue or higher earnings forecasts for the rest of the year, analysts have said. That will be a clearer signal that the recession is easing and that the economy is on the mend, they said.
Meanwhile, after stumbling during several days of trading, crude oil prices rose 27 cents to settle at $60.41 on the New York Mercantile Exchange. Crude oil prices have fallen from more than $70 a barrel amid concerns that rising prices could constrain consumer spending and that the economic recovery may take longer than some economists had hoped.
ConocoPhillips' stock rose 2.2 percent, to close at $40.31
Overseas markets were mixed. While London's FTSE and the Dax in Germany were up 0.50 percent and 1 percent, respectively, Japan's Nikkei fell 1 percent.
