Stocks gain after jobless claims drop
EmptyNEW YORK -- Wall Street shook off early uncertainty to close moderately higher Thursday as a series of mixed economic reports managed to make investors more optimistic about the chances for an interest rate cut.
The market was uneasy after the Mortgage Bankers Association said homeowners beginning the foreclosure process in the second quarter reached a record 0.65%. It was the third consecutive quarter that the figure reached an all-time high. Though investors want growth to be slow enough to merit a rate cut when the Federal Reserve meets Sept. 18, they don't want to see the economy weaken to the point of recession.
But investors gleaned some reason for optimism from comments from Dallas Federal Reserve President Richard Fisher, who said inflationary pressures are "increasingly well behaved," and that the central bank is "listening carefully" to business conditions. St. Louis Fed President William Poole made similar comments earlier in the day.
"They didn't explicitly say they were going to cut rates, but some of the talk from the day gave reason to believe they may be leaning that way," said Todd Salamone, director of trading at Schaeffer's Investment Research. "The market is driven by words from the Fed that reinforces the idea they'll step up if necessary, and it is also very much data driven."
Reports on the job market, service sector, and August retail sales did not disappoint investors. Last week, for the first time in seven weeks, claims for unemployment benefits dropped, the Labor Department said. It also reported that worker productivity jumped to an annual growth rate of 2.6% in the April to June quarter, much better than expected.
The snapshots boded well for Friday's August employment report, the economic reading that investors are considering the most important this week.
According to preliminary calculations, the Dow Jones industrial average rose 57.88, or 0.44%, to 13,363.35, after earlier wobbling in and out of positive territory.
Broader stock indicators also lifted. The Standard & Poor's 500 index rose 6.26, or 0.43%, to 1,478.55, and the Nasdaq composite index rose 8.37, or 0.32%, to 2,614.32.