NEW YORK (AP) — Stocks were mainly higher Thursday after a drop in new claims for unemployment benefits relieved some of the market's worries about slowing economic growth.
The Dow Jones industrial average rose 14 points in late morning trading. Broader indexes were also higher.
The market's response to the positive signal was muted, however, since the total number of benefits claims remains elevated. Investors are still worried about a persistently high unemployment rate of 9.5 percent and a general reluctance of employers to hire workers.
"On the positive side, claims came down slightly compared to the shock last week," said Oliver Pursche, executive vice president at Gary Goldberg Financial Services. "That said, the number still remains stubbornly high."
The Labor Department said first-time claims for unemployment benefits dropped to 473,000 last week, after jumping above 500,000 for the first time since November a week earlier. Economists were expecting a more modest drop to 490,000, according to Thomson Reuters.
The latest jobless claims report suggests that hiring remains weak. In a healthy economy, weekly claims usually fall below 400,000. At the height of the recession in March 2009, weekly claims peaked at 651,000.
On the positive side, this week's report marked the first decline after three straight weekly gains. It also tempered expectations that the economy might fall back into recession. A variety of economic indicators in recent months have pointed to slowing growth.
High unemployment remains the biggest obstacle to a stronger recovery because people worried about their jobs have cut back on spending. Companies have been slow to hire because of uncertainty surrounding tax, financial regulation and health care reform costs as well as worries about consumer demand.
In late morning trading, the Dow rose 14.07, or 0.1 percent, to 10,074.13. The Standard & Poor's 500 index rose 2.91, or 0.3 percent, to 1,058.24, while the Nasdaq composite index rose 1.03, or 0.1 percent, to 2,142.57.
About five stocks rose for every two that fell on the New York Stock Exchange, where volume came to 214.5 million shares.
Bond prices traded in a tight range, indicating not all investors are upbeat about the unemployment report and still holding onto the relative safety of government debt. Investors tend to buy up Treasurys, driving interest rates lower, when they are worried about economic growth.
The yield on the 10-year Treasury note was unchanged at 2.54 percent compared with late Wednesday. Its yield helps set interest rates on mortgages and other consumer loans.
Long-term bond yields are hovering around levels not recorded since early 2009, when the country was in the depths of the recession and stocks hit 12-year lows.
Low interest rates usually help to drive new growth because it makes it cheaper to borrow and buy everything from clothes to cars to houses. However that isn't encouraging shoppers now because they are worried about jobs and opting to save instead.
In corporate news, Dell Inc. said data storage maker 3Par Inc. accepted its raised takeover bid of 1.52 billion, or $24.30 per share. Dell's revised offer was better than rival Hewlett-Packard Co.'s offer of $24 per share.
Dell shares rose 11 cents to $11.90, while 3Par dropped 66 cents, or 2.5 percent, to $26.10. Shares of 3Par had jumped as the two computer makers appeared set for a bidding war that investors thought might drive the price even higher. Dell initially offered $18 a share for 3Par earlier this month before Hewlett-Packard jumped in with its bid.
Hewlett-Packard shares rose 31 cents to $38.55.
European markets got a lift from an improved consumer confidence reading on Germany's economy. Germany's DAX index rose 0.8 percent. France's CAC-40 climbed 1.1 percent and Britain's FTSE 100 rose 1 percent.
To add a comment, please register or login.