Stocks rally on hopes for more stimulus

By Andrea Tse

Stocks rose Thursday as new data on inflation and weekly unemployment claims renewed hopes for more economic stimulus from the Federal Reserve.

Investors also continued to keep a close eye on Europe, worrying that Greek general elections Sunday could lead to the country's exit from the euro and trigger disorder across the eurozone.

The Dow Jones Industrial Average ($INDU) was up 108 points at 12,605. The S&P 500 ($INX) was up 10 points at 1,325. The Nasdaq Composite Index ($COMPX) was up 18 points at 2,837.

The Labor Department on Thursday reported that U.S. initial jobless claims for the week ended June 9 rose to 386,000, up from the previous week's upwardly revised 380,000. Economists had predicted 375,000. The four-week moving average was 382,000, an increase of 3,500 from the previous week's 378,500. Continuing claims for the week ended June 2 were 3.278 million, a decrease of 33,000 from the preceding week's 3.311 million.

The Labor Department also reported that the consumer price index fell by 0.3% in May, matching expectations, with the core price index, excluding food and energy, rising 0.2%. Year over year, the CPI fell to 1.7% and the core CPI remained unchanged at 2.3%.

"The worse the numbers are in the U.S., the greater the pressure the Federal Reserve will have to increase their monetization plan," Chad Morganlander, a money manager at Stifel Nicolaus & Co., told Bloomberg. "There's a modest amount of optimism that the Greek vote will bode well for the markets. Investors are sitting on their hands waiting for Sunday’s vote."

Late Wednesday, Moody's downgraded Spain's debt rating to just a notch above junk, pending a review for another potential downgrade, citing the country's mounting debt burden, ailing economy and challenges tapping into the capital markets.

The downgrade follows Spain's request for a 100 billion-euro credit line from Europe to shore up its banking system. The Spanish 10-year bond yield topped 7%.

With Spanish contagion fears abounding and concerns that Italy will be the next eurozone country to request a bailout, Italy was able to raise its target 4.5 billion euros in a bond auction Thursday but at soaring borrowing costs.

The company also said its second-quarter loss from its smartphone business would be larger than expected. Nokia said it would record additional restructuring charges by the end of next year of about 1 billion euros.

Smithfield Foods (SFD), the meat processor, reported fourth-quarter earnings of $79.5 million, or 49 cents a share, down from year-earlier earnings of $98.4 million, or 59 cents.  Analysts had expected the company to post quarterly earnings of 53 cents a share. Sales rose 3% to $3.21 billion. Analysts were forecasting sales of $3.26 billion.

United Technologies (UTX) said its board approved an increase of 11.5% to the company's quarterly dividend, increasing it to 53.5 cents a share.

Costco (COST) is purchasing Controladora Comercial Mexicana's 50% stake in Costco de Mexico for about $760.4 million.

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