NEW YORK – Stocks are resuming their climb as investors get positive readings on two of the best gauges of the economy's health: consumer spending and corporate profits.
Major stock indexes rose more than 1 percent in midday trading Thursday, picking up where the market's rally left off earlier this week. The Dow Jones industrials put in their best back-to-back advance since July on Monday and Tuesday, rising 244 points, after two straight weeks of declines.
In a sign that consumer spending may finally be starting to recover, retailers last month saw their first sales gains in more than a year. A closely watched gauge of sales at major retailers showed an increase of 0.1 percent for September, compared with a 1.0 percent drop a year ago. While still tepid, it was the first monthly gain in the International Council of Shopping Centers-Goldman Sachs tally since July 2008, when the index was up 1.3 percent.
The upbeat mood on Wall Street was initially set after the close of trading Wednesday when Alcoa Inc. surprised investors with its first profit in nine months, which the aluminum company attributed to cost-cutting and rising sales to automakers. Alcoa also said it expects worldwide aluminum demand to increase 11 percent in the second half of the year.
One of the first major companies to report earnings, Alcoa's better-than-expected report and upbeat demand prediction reassured investors of a positive earnings season.
"Alcoa set the tone and backed it up," Michael Feser, president of Zecco Trading said.
A better reading on the labor market also raised investors' optimism. The Labor Department reported that new claims for jobless benefits fell to 521,000 last week, down from 554,000 the previous week and better than analysts had expected. It was the lowest level since early January. Continuing claims fell to 6.04 million, better than the slight increase analysts had expected.
The Dow rose 102.63, or 1.1 percent, to 9,828.21. The Standard & Poor's 500 index rose 12.22, or 1.2 percent, to 1,069.80, while the Nasdaq composite index rose 26.65, or 1.3 percent, to 2,136.98.
More than four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 506 million shares, compared with 480.2 million at the same time a day earlier.
In other trading, the Russell 2000 index of smaller companies rose 8.99, or 1.5 percent, to 611.07.
Thursday's gains put the market's seven-month rally back on track, sending the major indexes toward their best weekly gain since early July after back-to-back weeks of losses. Investors had become discouraged in recent weeks by a stream of disappointing economic data, as improvements in areas like manufacturing slowed.
But this week, the market got a boost of confidence from signs of growth in the service sector and a positive analyst report on banks. An interest rate hike in Australia, meanwhile, was seen as a vote of confidence in the global economy.
"The way we will perform is two steps forward, one step back," said Michael Strauss, chief economist at Commonfund in Wilton, Conn. "But at the end of the day we are moving to higher prices."
Still, much depends on how the rest of earnings season goes. Investors question whether the market's more than 50 percent move off of 12-year lows in March can continue at such a rapid pace if earnings results don't back up the market's perception that the economy is on track for growth.
"The Alcoa number that came out after-hours was surprisingly good, but we have a lot of major companies, including the financials, that will be coming out in the next couple of weeks," said Robert MacIntosh, chief economist at Eaton Vance Management. "I wouldn't say we're in the clear."
Companies mostly beat modest earnings expectations during the second quarter because of cost-cutting measures, and investors now want to see actual revenue growth as a driver of profits.
The reports from retailers on Thursday offered fresh hope that sales will be better this quarter. Limited Brands Inc., which runs Victoria's Secret and Bath & Body Works, and accessories chain The Buckle Inc. both posted sales increases for September.
J.C. Penney Co. and Target Corp. raised their profit outlooks after reporting smaller-than-expected declines.
Limited Brands rose 74 cents, or 4.2 percent, to $18.57, while J.C. Penney added 31 cents to $35.22.
Alcoa jumped more than 3 percent, gaining 49 cents to $14.69.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note fell to 3.16 percent from 3.19 percent late Wednesday. The yield on the three-month T-bill rose to 0.06 percent from 0.05 percent.
Commodities prices rallied as the dollar fell further against other currencies.
Gold hit another new record, rising as high as $1,059.60 an ounce. Oil prices rallied $2.68 to $72.75 a barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average rose 0.3 percent. Britain's FTSE 100 gained 0.9 percent, while Germany's DAX index and France's CAC-40 each jumped 1.3 percent.
Thursday, October 8, 2009
New jobless claims fall to 521K, lowest since Jan.
WASHINGTON – The number of newly laid-off workers filing first-time claims for jobless benefits fell to the lowest level since early January, as layoffs eased a bit amid a fledgling economic recovery.
The fourth drop in new claims in five weeks is a sign the labor market is slowly healing. But employers are reluctant to hire new workers and the unemployment rate is expected to keep climbing well into next year.
Separately, the nation's retailers saw modest signs of life from consumers in September, resulting in the first sales gain since July 2008 and fueling some hope for the holiday shopping season.
The Labor Department said Thursday that new claims for unemployment insurance dropped last week to a seasonally adjusted 521,000, better than analysts expected and down from 554,000 the previous week.
The four-week average, which smooths fluctuations, fell to 539,750, the lowest since Jan. 17. The number of people continuing to claim benefits declined by 72,000 to 6.04 million. Analysts expected continuing claims to rise slightly.
"The downtrend in claims is encouraging and points to continued, albeit gradual, improvement in the labor market," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.
Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.
Despite the improvement, initial claims remain well above the 325,000 that economists say is consistent with a healthy economy.
Meanwhile, a late Labor Day and delayed school openings helped boost back-to-school sales in September. The International Council of Shopping Centers-Goldman Sachs preliminary tally registered an increase of 0.1 percent for September, compared with a 1 percent drop a year ago. While still tepid, the results mark the first gain since July 2008, when the index rose 1.3 percent.
As stores announced their results Thursday, J.C. Penney Co., Macy's Inc., and Target Corp. all reported smaller-than-expected declines in sales at stores open at least a year. Limited Brands Inc., which runs Victoria's Secret and Bath & Body Works, and accessories chain The Buckle Inc. both posted increases for the month.
Still, industry worries remain high heading into the holiday shopping season because shoppers, many of whom were afraid to spend a year ago, are now grappling with rising job losses, reduced hours or unavailable credit.
The stock market rose in afternoon trading. The Dow Jones industrial average added about 93 points, and broader indexes also gained.
In a third report, the Commerce Department said businesses reduced inventories at the wholesale level for a record 12th straight month in August. In an encouraging sign, sales jumped by the largest amount in 14 months.
Economists hope the rising sales will persuade businesses to begin restocking their depleted shelves, a switch that would boost factory production and help bolster broad economic growth in coming months.
The jobless claims figures indicate that layoffs are slowing. Employers eliminated a net total of 263,000 jobs in September, the Labor Department said last week. Many economists expect that number to decline this month.
When federal emergency programs are included, the total number of jobless benefit recipients dropped by about 90,000 to 8.9 million in the week that ended Sept. 19, the latest data available. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states, and is considering adding another 13 weeks.
Many analysts expect the economy grew as much as 3 percent in the July-September quarter, but most employers are likely to hold back on new hires while they wait to see if such growth can be maintained.
The unemployment rate rose to 9.8 percent in September from 9.7 percent, the department said last week, the highest in 26 years. The recession, the worst since the 1930s, has eliminated a net total of 7.2 million jobs.
Federal Reserve Chairman Ben Bernanke said last week that even if the economy maintained a 3 percent growth rate for several quarters, unemployment would still be above 9 percent by the end of 2010.
More job cuts were announced this week. Thermo Fisher Scientific Inc., which makes industrial and scientific equipment, said it will close a plant in Dubuque, Iowa, next year, costing 350 jobs.
The fourth drop in new claims in five weeks is a sign the labor market is slowly healing. But employers are reluctant to hire new workers and the unemployment rate is expected to keep climbing well into next year.
Separately, the nation's retailers saw modest signs of life from consumers in September, resulting in the first sales gain since July 2008 and fueling some hope for the holiday shopping season.
The Labor Department said Thursday that new claims for unemployment insurance dropped last week to a seasonally adjusted 521,000, better than analysts expected and down from 554,000 the previous week.
The four-week average, which smooths fluctuations, fell to 539,750, the lowest since Jan. 17. The number of people continuing to claim benefits declined by 72,000 to 6.04 million. Analysts expected continuing claims to rise slightly.
"The downtrend in claims is encouraging and points to continued, albeit gradual, improvement in the labor market," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.
Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.
Despite the improvement, initial claims remain well above the 325,000 that economists say is consistent with a healthy economy.
Meanwhile, a late Labor Day and delayed school openings helped boost back-to-school sales in September. The International Council of Shopping Centers-Goldman Sachs preliminary tally registered an increase of 0.1 percent for September, compared with a 1 percent drop a year ago. While still tepid, the results mark the first gain since July 2008, when the index rose 1.3 percent.
As stores announced their results Thursday, J.C. Penney Co., Macy's Inc., and Target Corp. all reported smaller-than-expected declines in sales at stores open at least a year. Limited Brands Inc., which runs Victoria's Secret and Bath & Body Works, and accessories chain The Buckle Inc. both posted increases for the month.
Still, industry worries remain high heading into the holiday shopping season because shoppers, many of whom were afraid to spend a year ago, are now grappling with rising job losses, reduced hours or unavailable credit.
The stock market rose in afternoon trading. The Dow Jones industrial average added about 93 points, and broader indexes also gained.
In a third report, the Commerce Department said businesses reduced inventories at the wholesale level for a record 12th straight month in August. In an encouraging sign, sales jumped by the largest amount in 14 months.
Economists hope the rising sales will persuade businesses to begin restocking their depleted shelves, a switch that would boost factory production and help bolster broad economic growth in coming months.
The jobless claims figures indicate that layoffs are slowing. Employers eliminated a net total of 263,000 jobs in September, the Labor Department said last week. Many economists expect that number to decline this month.
When federal emergency programs are included, the total number of jobless benefit recipients dropped by about 90,000 to 8.9 million in the week that ended Sept. 19, the latest data available. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states, and is considering adding another 13 weeks.
Many analysts expect the economy grew as much as 3 percent in the July-September quarter, but most employers are likely to hold back on new hires while they wait to see if such growth can be maintained.
The unemployment rate rose to 9.8 percent in September from 9.7 percent, the department said last week, the highest in 26 years. The recession, the worst since the 1930s, has eliminated a net total of 7.2 million jobs.
Federal Reserve Chairman Ben Bernanke said last week that even if the economy maintained a 3 percent growth rate for several quarters, unemployment would still be above 9 percent by the end of 2010.
More job cuts were announced this week. Thermo Fisher Scientific Inc., which makes industrial and scientific equipment, said it will close a plant in Dubuque, Iowa, next year, costing 350 jobs.
New quakes, small tsunami panic Pacific islanders
WELLINGTON, New Zealand – Thousands of panicked South Pacific islanders raced away from coastlines after a series of strong earthquakes rocked the region and generated a small tsunami Thursday, just over a week after a massive wave killed 178 people in the Samoas and Tonga.
There were no immediate reports of damage, and tsunami warnings for 11 nations and territories were soon canceled. But people across the South Pacific took no chances, scrambling up hillsides and maneuvering through traffic-clogged streets to reach higher ground.
"There is panic here, too," Chris McKee, assistant director of the Geophysical Observatory in Papua New Guinea told The Associated Press. "People have rushed out onto the streets and are climbing hills."
The Pacific Tsunami Warning Center issued a regional tsunami warning after a quake with a magnitude of 7.8 struck 183 miles (294 kilometers) northwest of the Vanuatu island of Santo at a depth of 21 miles (35 kilometers). Within an hour, two other temblors of magnitude 7.7 and 7.3 followed.
The Hawaii-based center canceled the warnings after sea-level readings indicated that the wave generated by the quakes was too small — just 0.3 feet (0.1 meter) at Luganville on the Vanuatu island nearest the quakes — to cause much damage.
A fourth quake of magnitude 7.0 was recorded by the U.S. Geological Survey nearly 10 hours after the initial quake at a depth of 21 miles (35 kilometers) in the same ocean area northeast of Vanuatu. No tsunami alert was issued.
There were no immediate reports of injury or damage from officials in Vanuatu, a chain of 83 islands about 1,400 miles (2,200 kilometers) northeast of Sydney, Australia.
"We felt the quake — it shook the ground, but not very strongly," said a police officer in Luganville who declined to give his name as he was not authorized to speak to the media.
Thursday's small tsunami came just over a week after a magnitude 8.3 quake sparked a large wave in the South Pacific that devastated coastal villages in Samoa, American Samoa and northern Tonga. The death toll from the Sept. 29 tsunami rose by five Thursday to 183 after searchers in Samoa found more bodies, said Vaosa Epa, chief executive in the office of the Prime Minister and Cabinet. Another 32 people were killed in American Samoa and nine in Tonga.
That tragedy was fresh in the minds of residents of Tuvalu, a low-lying nation of eight coral atolls with about 10,000 people. Thousands fled inland after Thursday's alerts, some clustering around the government building in the capital, Funafuti — the only multistory building in the country.
In Samoa, where at least 142 were killed in the Sept. 29 tsunami, residents quickly headed for the hills. Cars clogged the roads leading inland, resident Russell Hunter told the AP in the capital, Apia.
"People were genuinely afraid," said Hunter, editor of the Samoa Observer newspaper. "They saw what happened last week and didn't want to be part of that again."
Thursday's warnings also created worry in American Samoa. Schools, government buildings and other residents were evacuated in the U.S. territory.
In New Caledonia, officials warned residents with alert horns and text messages. Schools were evacuated along the east coast and on the nearby Loyalty Islands.
Seismologist Rafael Abreu with the U.S. Geological Survey said Thursday's quakes appear to be unrelated to the Sept. 29 quake near Samoa.
The quakes occurred on different fault lines and the way the earth's plates moved in both events also differed, he said.
There were no immediate reports of damage, and tsunami warnings for 11 nations and territories were soon canceled. But people across the South Pacific took no chances, scrambling up hillsides and maneuvering through traffic-clogged streets to reach higher ground.
"There is panic here, too," Chris McKee, assistant director of the Geophysical Observatory in Papua New Guinea told The Associated Press. "People have rushed out onto the streets and are climbing hills."
The Pacific Tsunami Warning Center issued a regional tsunami warning after a quake with a magnitude of 7.8 struck 183 miles (294 kilometers) northwest of the Vanuatu island of Santo at a depth of 21 miles (35 kilometers). Within an hour, two other temblors of magnitude 7.7 and 7.3 followed.
The Hawaii-based center canceled the warnings after sea-level readings indicated that the wave generated by the quakes was too small — just 0.3 feet (0.1 meter) at Luganville on the Vanuatu island nearest the quakes — to cause much damage.
A fourth quake of magnitude 7.0 was recorded by the U.S. Geological Survey nearly 10 hours after the initial quake at a depth of 21 miles (35 kilometers) in the same ocean area northeast of Vanuatu. No tsunami alert was issued.
There were no immediate reports of injury or damage from officials in Vanuatu, a chain of 83 islands about 1,400 miles (2,200 kilometers) northeast of Sydney, Australia.
"We felt the quake — it shook the ground, but not very strongly," said a police officer in Luganville who declined to give his name as he was not authorized to speak to the media.
Thursday's small tsunami came just over a week after a magnitude 8.3 quake sparked a large wave in the South Pacific that devastated coastal villages in Samoa, American Samoa and northern Tonga. The death toll from the Sept. 29 tsunami rose by five Thursday to 183 after searchers in Samoa found more bodies, said Vaosa Epa, chief executive in the office of the Prime Minister and Cabinet. Another 32 people were killed in American Samoa and nine in Tonga.
That tragedy was fresh in the minds of residents of Tuvalu, a low-lying nation of eight coral atolls with about 10,000 people. Thousands fled inland after Thursday's alerts, some clustering around the government building in the capital, Funafuti — the only multistory building in the country.
In Samoa, where at least 142 were killed in the Sept. 29 tsunami, residents quickly headed for the hills. Cars clogged the roads leading inland, resident Russell Hunter told the AP in the capital, Apia.
"People were genuinely afraid," said Hunter, editor of the Samoa Observer newspaper. "They saw what happened last week and didn't want to be part of that again."
Thursday's warnings also created worry in American Samoa. Schools, government buildings and other residents were evacuated in the U.S. territory.
In New Caledonia, officials warned residents with alert horns and text messages. Schools were evacuated along the east coast and on the nearby Loyalty Islands.
Seismologist Rafael Abreu with the U.S. Geological Survey said Thursday's quakes appear to be unrelated to the Sept. 29 quake near Samoa.
The quakes occurred on different fault lines and the way the earth's plates moved in both events also differed, he said.
Israeli foreign minister: No peace deal now
ERUSALEM – Israel's foreign minister declared Thursday that there is no chance of reaching a final accord with the Palestinians any time soon, casting a pall over the U.S. Mideast envoy's latest effort to get peace talks moving again.
Foreign Minister Avigdor Lieberman suggested that the two sides come up with a long-term interim arrangement that would ensure prosperity, security and stability. He recommended leaving the toughest issues — such as the status of disputed Jerusalem and a solution for Palestinian refugees who lost homes amid war — "to a much later stage."
He did not elaborate or give a timeline.
"Anyone who says that within the next few years an agreement can be reached ending the conflict ... simply doesn't understand the situation and spreads delusions, ultimately leading to disappointments and an all-out confrontation here," Lieberman told Israel Radio.
Other conflicts have been defused with the sides making a "dramatic decision" to renounce violence and enter into a period of calm that would allow an accord, Lieberman said.
"People have learned to live with it," he said.
Lieberman's suggestion will not necessary translate into peace policy, which is set by Prime Minister Benjamin Netanyahu. Netanyahu's office wouldn't comment when asked if Lieberman's comments reflected his opinion or government policy. But other senior Netanyahu confidants share similarly skeptical views on peacemaking.
Lieberman's approach runs counter to U.S. efforts to reach an Israeli-Palestinian peace deal quickly. The Palestinians have said they will not agree to an interim peace deal that would put off a resolution of the conflict indefinitely.
Palestinian President Mahmoud Abbas will tell visiting U.S. envoy George Mitchell that he will not resume peace talks until Israel freezes settlement expansion and the two sides set out a clear agenda for resumed peacemaking, according to Jibril Rajoub, a key member of Abbas' Fatah Party.
Abbas could be hard-pressed to back down because of the furor he has unleashed at home by suspending efforts to bring Israel before a war crimes tribunal in connection with its winter war in the Gaza Strip.
Nearly 1,400 Palestinians were killed in the war, including hundreds of civilians. Israel, which lost 13 civilians and soldiers in the war, launched the campaign to end years of Hamas rocket fire on Israeli border towns.
President Barack Obama brought Abbas and Netanyahu together in New York last month in an effort to jump-start talks that broke down months ago. So far, no breakthroughs have been announced.
Since the New York summit, Mitchell met with representatives of Netanyahu and Abbas in the United States, before returning to the region this week. He had meetings with Lieberman and Israeli Defense Minister Ehud Barak lined up on Thursday and with Netanyahu and Abbas on Friday.
While Lieberman was speaking pessimistically about efforts to reach a deal, Mitchell was doggedly pressing ahead.
"We're going to continue with our efforts to achieve an early relaunch of negotiations between Israelis and Palestinians, because we believe that's an essential step toward achieving the comprehensive (Mideast) peace to which I earlier referred," he told reporters as he entered a meeting with Israeli President Shimon Peres.
In an interview with the Israeli Haaretz daily, Jordan's King Abdullah II also warned of further stagnation in peace talks, saying that because of the impasse "we are sliding back into the darkness."
Mitchell has been laboring for months to pressure Israel to curb settlement construction. Israel has agreed to limited and temporary restrictions on building in the West Bank, but has resisted a total freeze. It has rejected any limitations on construction in east Jerusalem.
The Palestinians want the West Bank and east Jerusalem for part of their future state, along with the Gaza Strip, now ruled by Islamic Hamas militants.
Foreign Minister Avigdor Lieberman suggested that the two sides come up with a long-term interim arrangement that would ensure prosperity, security and stability. He recommended leaving the toughest issues — such as the status of disputed Jerusalem and a solution for Palestinian refugees who lost homes amid war — "to a much later stage."
He did not elaborate or give a timeline.
"Anyone who says that within the next few years an agreement can be reached ending the conflict ... simply doesn't understand the situation and spreads delusions, ultimately leading to disappointments and an all-out confrontation here," Lieberman told Israel Radio.
Other conflicts have been defused with the sides making a "dramatic decision" to renounce violence and enter into a period of calm that would allow an accord, Lieberman said.
"People have learned to live with it," he said.
Lieberman's suggestion will not necessary translate into peace policy, which is set by Prime Minister Benjamin Netanyahu. Netanyahu's office wouldn't comment when asked if Lieberman's comments reflected his opinion or government policy. But other senior Netanyahu confidants share similarly skeptical views on peacemaking.
Lieberman's approach runs counter to U.S. efforts to reach an Israeli-Palestinian peace deal quickly. The Palestinians have said they will not agree to an interim peace deal that would put off a resolution of the conflict indefinitely.
Palestinian President Mahmoud Abbas will tell visiting U.S. envoy George Mitchell that he will not resume peace talks until Israel freezes settlement expansion and the two sides set out a clear agenda for resumed peacemaking, according to Jibril Rajoub, a key member of Abbas' Fatah Party.
Abbas could be hard-pressed to back down because of the furor he has unleashed at home by suspending efforts to bring Israel before a war crimes tribunal in connection with its winter war in the Gaza Strip.
Nearly 1,400 Palestinians were killed in the war, including hundreds of civilians. Israel, which lost 13 civilians and soldiers in the war, launched the campaign to end years of Hamas rocket fire on Israeli border towns.
President Barack Obama brought Abbas and Netanyahu together in New York last month in an effort to jump-start talks that broke down months ago. So far, no breakthroughs have been announced.
Since the New York summit, Mitchell met with representatives of Netanyahu and Abbas in the United States, before returning to the region this week. He had meetings with Lieberman and Israeli Defense Minister Ehud Barak lined up on Thursday and with Netanyahu and Abbas on Friday.
While Lieberman was speaking pessimistically about efforts to reach a deal, Mitchell was doggedly pressing ahead.
"We're going to continue with our efforts to achieve an early relaunch of negotiations between Israelis and Palestinians, because we believe that's an essential step toward achieving the comprehensive (Mideast) peace to which I earlier referred," he told reporters as he entered a meeting with Israeli President Shimon Peres.
In an interview with the Israeli Haaretz daily, Jordan's King Abdullah II also warned of further stagnation in peace talks, saying that because of the impasse "we are sliding back into the darkness."
Mitchell has been laboring for months to pressure Israel to curb settlement construction. Israel has agreed to limited and temporary restrictions on building in the West Bank, but has resisted a total freeze. It has rejected any limitations on construction in east Jerusalem.
The Palestinians want the West Bank and east Jerusalem for part of their future state, along with the Gaza Strip, now ruled by Islamic Hamas militants.
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