U.S. Stocks Rise After Unemployment Report
Fewer Americans joined the unemployment line last week, and that rare piece of encouraging economic news pushed stocks higher Thursday.
The Dow Jones industrial average rose 113 points, or 1.1 percent, to 10,834 a half hour after markets opened.
The gain pulls the average further away from bear-market territory: The Dow ended Wednesday at 16.3 percent below its high for the year, set on April 29. A drop of 20 percent would mean the bull market that began in March 2009 has turned into a bear.
The S&P 500 index rose 12, or 1.1 percent, to 1,133. The Nasdaq composite index rose 33, or 1.4 percent, to 2,415.
The number of people filing for unemployment benefits for the first time fell to 395,000 last week, down 7,000 from a week earlier. It's the first time that number has dropped below 400,000 in four months, and it may be a sign that the job market is slowly improving after its three-month slump. Job growth slowed to an average of 72,000 in May, June and July. In the previous three months, employers added an average of 215,000 jobs per month.
Investors have seen little encouraging economic data since the government said last month that the economy grew at its slowest pace in the first half of 2011 since the recession ended in 2009. Worries about the weak economy and the first-ever downgrade of the U.S. credit rating contributed to big swings in stocks this week.
So have concerns about Europe's debt crisis, and investors have focused in particular on French banks this week. The head of France's central bank said Thursday that the country's banks are solid and blamed "unfounded rumors" for big drops in their stocks.
The leaders of France and Germany, the region's biggest economies, said they will meet next week to talk about how to solve Europe's financial difficulties. Investors worry that Europe's debt problems could hurt the banks that own European government bonds. Because of how intertwined the global financial system is, pain for European banks could lead to more trouble for the U.S. banking industry and economy.
Technology stocks led the U.S. market higher. Cisco Systems Inc. reported profit for its latest quarter that topped analysts' expectations. It is considered a bellwether for the tech industry because it is the world's largest maker of computer networking equipment. Cisco also said revenue may grow more quickly this quarter than analysts were anticipating. Cisco rose 14.4 percent. As a group, tech stocks in the S&P 500 rose 2 percent.
Financial stocks also rebounded from their steep drop Wednesday, up 1.7percent after a 7.1 percent drop a day earlier.
News Corp., the media conglomerate that owns Fox News, rose 12.7 percent. It reported earnings late Wednesday that were better than analysts expected.
Gold prices fell $20.70 per ounce to $1,763.60. CME Group raised the amount of money that investors must put up to buy a gold contract on its COMEX exchange by 22 percent late Wednesday, driving prices off all-time highs above $1,800 per ounce as some investors were forced out.
The Dow on Wednesday plunged 519.83 points on worries about Europe's debt problems and the weak economy. It was the third straight day that the Dow moved more than 400 points, either up or down. That hasn't happened since November 2008.
This program aired on August 11, 2011. The audio for this program is not available.