Stocks jump as joblessness eases

New claims for unemployment benefits fall more than forecast. The trade deficit narrows more than expected. Apple plans to relax its application rules. 3M will buy a surgical-device maker for $810 million.

By TheStreet Staff Sep 9, 2010 7:51AM

TheStreetBy Melinda Peer, TheStreet

 

Updated at 1:11 p.m. ET

 

Stocks were rising today after new jobless claims dropped more than expected and the U.S. trade gap narrowed, boosting confidence in the slow economic recovery.  

 

At 1:11 p.m. ET, the Dow Jones Industrial Average ($INDU) was up 23 points, or 0.2%, at 10,411. The S&P 500 ($INX) was up 5 points, or 0.9%, at 1,108. The Nasdaq ($COMPX) was rising 8.4 points, or 0.4%, to 2,237.  

 

"Markets seem to be seeing that the recovery is continuing at a modest pace and are discounting fears of a double-dip recession," said Joe Heider, principal at Rehmann Financial.

 

The Labor Department said the number of new claims for unemployment insurance fell by 27,000 to 451,000 during the week ended Sept. 4, suggesting that U.S. companies are laying off fewer workers. Economists had expected claims to decline by 2,000, according to Briefing.com.

 

The Commerce Department said the trade deficit shrank by 14% to $42.8 billion in July as imports declined. Economists had expected the gap to narrow to $47.3 billion from a revised $49.8 billion in June, according to Briefing.com. In July, U.S. exports rose $2.8 billion to $153.3 billion and imports fell by $4.2 billion $196.1 billion

Investor optimism was tempered after two groups cut their economic growth forecasts.

 

The Blue Chip Economic Indicators report predicts U.S. gross domestic product will expand by 2.7% this year, 0.6 percentage point less than its June forecast. The panel of 50 economists cited lower consumer spending, business investment and construction.

 

The Organization for Economic Cooperation and Development projects the economies of the Group of Seven countries, which include the U.S., will grow by an annual rate of 1.5% in the second half, less than the 1.75% previously forecast. 

 

Bank of America (BAC) was the best-performing stock, rising 2.9% to $13.76, followed by JPMorgan (JPM).  

 

3M (MMM) said it will buy Arizant, a maker of surgical patient temperature-management systems, for $810 million to expand its infection-prevention offerings. The company said the deal would cut its per-share earnings by 3 cents during the 12 months after the deal closes. 3M shares were up 0.2% at $82.89.

 

McDonald's (MCD), the Dow's biggest loser, said sales at stores open at least a year increased 4.9% in August from a year earlier after climbing 7% in July. McDonald's shares were falling 3% to $73.82.

 

Apple (AAPL) will ease restrictions on developers who create applications for its operating system. Apple had required developers to use its development products. Shares of Adobe (ADBE), whose Flash software was among the banned tools, were rising 12% to $32.90. Apple shares were rising 0.6% to $264.43.

 

A subsidiary of Johnson & Johnson (JNJ) said it will stop selling Zevtera, a drug used to treat skin and soft-tissue infections, in Switzerland on Sept. 17. The company cited "unfavorable assessments of the marketing authorization applications." J&J shares were advancing 1.4% to $59.67.

 

United Airlines' parent company, UAL (UAUA), saw its stock slip 5.9% to $20.76 despite reporting double-digit unit revenue gains in August as investors remained concerned about future demand amid a slowing economic recovery.

 

The U.K. Financial Authority said Goldman Sachs (GS) must pay a 17.5 million-pound ($26.92 million) penalty for failing to disclose that it was being investigated for fraud in the U.S. Goldman Sachs shares were rising 0.9% to $148.93.

 

BMW credited strong Asian demand, particularly in China, for a sales jump of 12.5% in August.

 

The Energy Information Administration said natural gas storage levels increased by 58 billion cubic feet in the week ended Sept. 3, within analysts' expectations for a gain of 56 billion to 60 billion cubic feet, according to Platts.
 
The EIA also said crude oil inventories shed 1.8 million barrels last week, more than the 730,000-barrel drop analysts polled by Platts had expected but far less than the 7.3 million-barrel decline the American Petroleum Institute reported Wednesday.

Gasoline supplies fell by 243,000 barrels, and distillates shrank by 400,000 barrels. Analysts had projected a 820,000-barrel decline in gasoline and a 940,000-barrel increase in distillates.
 
The October natural-gas contract was trading 10 cents lower at $3.71 per million British thermal units. Crude oil for October delivery was adding 6 cents at $74.73 a barrel.

 

The benchmark 10-year Treasury note was down by 21/32, raising the yield to 2.728%.   

 

The dollar index showed the greenback to be trading slightly higher against a basket of currencies. The December gold contract, the most actively traded gold future, was down by $9.60 at $1,249.50 an ounce.  

 

European stocks rose after the Bank of England opted to keep interest rates at 0.5% for the 18th consecutive month.  

 

The FTSE in London added 1.2%, and the DAX in Frankfurt rose 0.9%. Hong Kong's Hang Seng inched up 0.4%, while Japan's Nikkei gained 0.8%.

 

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