Stocks close with big gains as hope builds for job recovery
ASSOCIATED PRESS March 3, 2011 3:20PM
Traders work on the floor of the New York Stock Exchange. | AP Photo/Richard Drew
Updated: March 3, 2011 6:00PM
Stocks rose sharply on Thursday after an unexpected drop in new applications for unemployment benefits and strong retail sales. The Dow Jones industrial average had its biggest gain since Dec. 1.
The Labor Department said first-time claims for unemployment benefits fell to 368,000. That’s the lowest level since May 2008. Economists had expected the number of claims to rise.
Separately, the Institute for Supply Management said its measure of hiring by service companies rose to the highest level since April 2006. The index covers a broad range of industries including retail, health care and financial services.
The signs of job growth followed a report Wednesday from payroll processor ADP saying that private employers added far more jobs than analysts had expected last month. Those gains are raising hopes that Friday’s jobs report from the Labor Department will show that the unemployment rate fell from its current level of 9 percent.
Retailers Limited Brands Inc., Macy’s Inc. and Nordstrom Inc. all reported gains in February sales compared with the same month last year. Wendy’s/Arby’s Group Inc. trimmed its losses in the fourth-quarter and beat analysts’ revenue estimates. The stock rose 7.6 percent.
The Dow Jones industrial average gained 191.40 points, or 1.6 percent, to 12,258.20. The Dow is still below where it was trading on Feb. 18, before a three-day plunge caused by a surge in oil prices as the unrest in Libya deepened.
The Standard & Poor’s 500 index rose 22.53, or 1.7 percent, to 1,330.97.
All 10 company groups that make up the S&P index rose. Industrial companies had the largest gain, with 2.4 percent. Caterpillar Inc. gained 3 percent, the largest increase among the 30 stocks that make up the Dow average.
The Nasdaq composite index gained 50.67, or 1.8 percent, to 2,798.74.
The drop in unemployment claims pushed Treasury prices lower, raising their yields. The yield on the 10-year note rose to 3.56 percent, up from 3.48 percent late Wednesday.
Oil prices eased slightly, but remained above $100 a barrel. Concerns over the impact of high oil prices on the U.S. economy have rattled markets over the past two weeks. Crude settled above $102 on Wednesday for the first time since September 2008.
Five stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was 4.5 billion shares.