By Steven Russolillo
NEW YORK (MarketWatch) -- U.S. stocks opened sharply higher
Thursday despite a bigger-than-expected rise in jobless claims, as
investors reacted positively to the Federal Reserve's latest
efforts to prop up the sagging economy.
The Dow Jones Industrial Average (DJI) gained 120 points, or
1.1%, to 11335, fueled by Caterpillar (CAT), Alcoa (AA) and Bank of
America (BAC). The gains come a day after the blue-chip index
reached its highest closing level since September 2008 when Lehman
Brothers filed for bankruptcy.
The Standard & Poor's 500-share index (SPX) rose 1.2% to
1212, led by the materials, energy and consumer discretionary
sectors. The technology-heavy Nasdaq Composite (RIXF) gained 1.3%
to 2574.
Investors pushed stocks higher as they digested the Fed's
announced plans on Wednesday to purchase an additional $600 billion
of longer-term Treasury securities by June, a pace of about $75
billion per month. The central bank also will keep reinvesting
principal payments from its securities holdings.
On the economic front, initial unemployment claims jumped by
20,000 to 457,000 in the week ended Oct. 30, the Labor Department
said in its weekly report. The previous week's figures were revised
upward to 437,000 from 434,000. Economists surveyed by Dow Jones
Newswires had expected claims would rise by 11,000.
The four-week moving average, which aims to smooth volatility in
the data, rose by 2,000 to 456,000 from the prior week's revised
average of 454,000.
Additionally, U.S. productivity bounced back in the third
quarter as output growth rose and labor costs edged lower. Nonfarm
business productivity rose at a 1.9% annual rate in the July to
September period after falling by 1.8% in the second quarter,
according to the Labor Department. The third-quarter figure
exceeded economists' expectations of 1.5%.
In Europe, stock markets rallied to multi-month highs on the Fed
news. Commodities also posted strong gains. Gold futures surged
$39.80, or 3%, to $1,377.40 an ounce, while crude oil jumped above
$86 a barrel.
In contrast, the greenback slumped against its major rivals. The
U.S. Dollar Index (DXY), which tracks the U.S. currency against a
basket of six others, fell 1% to 75.76. The euro gained strength,
trading recently at $1.4273, up from $1.4121 late Wednesday in New
York.
As expected, the Bank of England's Monetary Policy Committee
voted against an immediate expansion of its bond purchasing program
Thursday and also left its key interest rate unchanged.
Investors are also digesting mixed October sales reports from
retailers. Target posted a same-store sales rise of 1.7%, at the
low end of the company's expectations but beating a 1.5% rise
expected by analysts. Macy's (M), Saks (SKS) and Nordstrom (JWN)
posted same-store sales figures that exceeded analysts
expectations, while Aeropostale (ARO), Big Lots (BIG) and Hot Topic
(HOTT) registered disappointing results.
Among stocks in focus, Potash Corp. of Saskatchewan (POT) fell
3.6% after the Canadian government rejected BHP Billiton's (BHP)
$38.6 billion hostile bid for it, but gave the Anglo-Australian
miner another 30 days to try to convince the government of its
case.
Time Warner Cable's (TWC) third-quarter earnings rose 34%,
beating analysts' estimates, as revenue increased, but the company
lost subscribers. Shares rose 6.2%.
Conversely, Cablevision Systems' (CVC) third-quarter earnings
rose 13%, but fell short of analysts' estimates and shares dropped
1.6%.
Huntsman swung to a third-quarter profit from a prior-year loss
as the chemical company reported stronger volume and prices. Shares
rose 2.7% in premarket trading. Hunstman (HUN) rose 4.5%.
DirecTV Group's (DTV) third-quarter earnings jumped 31% from a
year ago as revenue rose and the company added more subscribers
than a year earlier. Earnings were in line with analysts
expectations, but shares fell 2.4%.
CBOE Holdings' third-quarter earnings rose 6.8%, with adjusted
results beating analysts' estimates, as the operator of the Chicago
Board Options Exchange saw its revenue increase despite lower
volume. Shares rose 1.4%.