Stocks Surge to Record Levels for the Year

Stocks climbed Thursday to their highest levels this year as investors cheered favorable earnings reports and signs the economy could be stabilizing.

All of the major indexes were up about 2 percent during early trading, but lost ground during the last hour of trading. The Dow Jones industrial average gained 0.9 percent, or 83.74 points to close at 9154.46. That is the highest close for the Dow, an index of blue-chip stocks, since November. The broader Standard & Poor's 500-stock index was up 1.2 percent, or 11.6 points to 986.75, and the technology-heavy Nasdaq gained 0.8 percent, or 16.54 points to 1984.30 -- both also hitting high points for the year.

Financial and technology stocks helped to lead the rally. Bank of America and J.P. Morgan Chase, for example, were up 3.3 percent and 1.9 percent, respectively. Apple was up 1.7 percent.

Thursdays gains extended a rally sparked earlier this month by several companies beating profit expectations in what many analysts expected to be a dismal earnings season. Dow Chemical, Motorola, and MasterCard all saw their stocks jump yesterday after reporting better than expected earnings. "While we remain concerned that markets are getting too optimistic, we cannot stand in the way of this train," Brown Brothers Harriman & Co. said in a research note this afternoon.

Stocks rose despite an uptick in initial jobless claims last week. The number of people filing for unemployment insurance jumped 25,000 to 584,000, according to Labor Department data.

"The latest report is actually reasonably good news on the employment front," Abiel Reinhart of J.P. Morgan Chase wrote in a research note this morning. "Obviously claims are still high and pointing to substantial payroll losses, but things appear to be gradually improving."

Investors focused a dip in the number of people requiring unemployment benefits for an extended period and the fact that the average number of initial claims has fallen over the last month. That could translate into strong report Friday on second-quarter gross domestic product, said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"Could the recession be behind us? That's what people are wondering," said Orlando.

Not all of the news yesterday was upbeat. Exxon Mobil reported a 66 percent drop in second-quarter profit amid falling oil prices and weak fuel demand during a global recession.

"We knew they were going to be bad. I don't know if everybody was overly surprised that the sector didn't do as well as the obscene profits last year," said Phil Flynn, oil analyst at PFG Best Research in Chicago.

Exxon shares fell about 1 percent to close at $70.72.

The rest of the energy sector rallied as crude oil prices jumped 3.6, or 5.6 percent, to settle at $66.94 a barrel on the New York Mercantile Exchange. Chevron and ConocoPhillips were up about 0.9 percent and 0.8 percent respectively.

Overseas markets were also up. London's FTSE and the Dax in Germany gained nearly 2 percent. Japan's Nikkei was up 0.5 percent.