By Kristina Peterson
U.S. stocks rose Thursday, driven by a larger-than-expected
decline in jobless claims and a handful of retailers reporting
robust same-store sales.
After breaking above the 10,000 level on Wednesday, the Dow
Jones Industrial Average (DJI) rose 43 points, or 0.4%, to 10,064.
Leading the measure, Boeing (BA) rose 2.1% after it said late
Wednesday it will acquire Narus Inc., a privately held software
company that specializes in protecting large Internet protocol
networks from attack. Boeing also said it started a tender offer
for another software company, Argon ST. Economically sensitive
General Electric (GE) gained 0.7% and American Express (AXP) rose
0.9%.
Checking some of the Dow's gains, Home Depot (HD) fell 0.9%,
while Travelers (TRV) slipped 0.8%.
The Nasdaq Composite Index (RIXF) rose 0.2% to 2,165. The
S&P 500 Index (SPX) gained 0.2% to 1,062, led by its
industrials sector. Consumer staples also strengthened, boosted by
strong June sales at warehouse retailer Costco Wholesale (COST).
Costco shares gained 1.9% after the company's June same-store sales
rose 4%, slightly below expectations for a rise of 4.2%, though the
company noted the shift in Memorial Day hurt sales by about 2%.
Walgreen (WAG) rose 2.5%, while Tyson Foods (TSN) gained 1.6%.
In a hopeful sign for the jobs market, the Labor Department said
initial claims for jobless benefits declined by 21,000 to 454,000
in the week ended July 3, more than the 12,000 drop expected by
economists. However, the previous week's level was revised upward,
from 472,000 to 475,000.
Safe-haven assets declined as economic optimism strengthened. As
demand for Treasurys slid, the yield on the benchmark 10-year note
(UST10Y) rose above 3% for the first time since June 29. The
10-year note was recently down to yield 3.04%.
Investors said the decline in jobless claims was encouraging,
but noted the number of claims remains stubbornly above 450,000, a
sign that job creation is still stalled.
"We're still in that range" between 450,000 and 475,000, said
Sean Kraus, chief investment officer at CitizensTrust. But he noted
that after the market's recent slump, investors have been quick
this week to seize on the encouraging data points.
"Anything positive is going to cause a very oversold market to
rebound," Kraus said.
The euro strengthened after European Central Bank President
Jean-Claude Trichet reiterated support for European bank stress
tests and said investors were too pessimistic on the euro zone's
ability to deal with the sovereign debt crisis. However, Trichet
also said the region's economic recovery would likely be
uneven.
"Looking ahead, we expect the euro-area economy to grow at a
moderate and still uneven pace in an environment of high
uncertainty," he said, speaking at a news conference in Frankfurt
following the ECB's decision to keep its benchmark rate
unchanged.
The remarks come amid growing fears that the region's
slow-motion economic upturn is losing steam. The International
Monetary Fund earlier Thursday warned that downside risks to the
global recovery "have risen sharply amid renewed financial
turbulence," alluding mainly to European governments' debt
problems. The euro was recently trading at $1.2681, up from $1.2642
late Wednesday in New York.
June chain-store sales were mixed, with some stores benefiting
from aggressive promotions and others hurt by consumers' continued
restrained spending. Abercrombie & Fitch (ANF) jumped 9.5%
after same-store sales rose 9%, above analysts' average estimate of
5.5% as the company benefited from aggressive promotions last
month. Limited Brands (LTD) gained 0.8% after its June same-store
sales rose 6%, nearly doubling expectations for a rise of 3.2%.
However, teen retailers struggled, as Buckle (BKE) dropped 9.5%
after its June same-store sales slipped 7.3%, below estimates of a
0.1% gain. Wet Seal's (WTSLA) June sales dropped 5.7%, below
projections, and the company said its sees second-quarter earnings
below its prior outlook, sending shares down 4%.
Among other stocks in focus, American depositary shares of BP
(BP) gained 0.2% after the company set a new target to seal the oil
well. The oil giant is pushing to fix its runaway Gulf oil well by
July 27 in a bid to show investors it has capped its ballooning
financial liabilities, The Wall Street Journal reported, citing
company officials.
In currency markets, the dollar weakened against the euro, but
strengthened against the yen. Crude-oil futures climbed to nearly
$76 a barrel.