Stocks rise on stimulus hopes, China rate cut

Investors await comments from the Fed about the possibility of more quantitative easing. US initial jobless claims fall. China cuts a key interest rate.

By TheStreet Staff Jun 7, 2012 9:07AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock) Updated at 10:13 a.m. ET


By Andrea Tse


Stocks rose Thursday as the markets hoped for signs of monetary stimulus from Federal Reserve Chairman Ben Bernanke at his congressional testimony and after a fall in weekly initial jobless claims.


The Dow Jones Industrial Average ($INDU) was up by 92 points at 12,506. The S&P 500 ($INX) was up by 7 points at 1,322. The Nasdaq ($COMPX) was rising by 10 points to 2,855.


The major U.S. indexes closed up more than 2% Wednesday as investors flooded into stocks on the hope that the Fed might soon signal its openness to another round of quantitative easing.


Bernanke testifies before the Joint Economic Committee in Congress at 10 a.m. ET. Investors will parse the nuances of his congressional testimony for guidance ahead of the FOMC meeting in two weeks. 


Policymakers in recent days have remained divided over the need for more stimulus, and investors want to know whether the Fed will ultimately agree to act on tepid domestic jobs growth, deepening European contagion risks and the looming U.S. fiscal cliff with an Operation Twist II or QE III this month.

 

Federal Reserve Vice Chair Janet Yellen said Wednesday night that "risk management considerations arising from today's unusual circumstances strengthen the case for additional accommodation," suggesting that the Fed could ramp up its bond purchasing program or hold off on interest rate hikes.


The Labor Department reported Thursday that initial jobless claims for the week ended June 2 fell to 377,000 from the previous week's upwardly revised figure of 389,000. The decline was the first since April. Economists surveyed by Briefing.com had expected the number of Americans filing unemployment claims for the first time to slide to 375,000. 


The four-week moving average was 377,750, an increase of 1,750 from the previous week's average of 376,000.


Continuing claims for the week ended May 26 totaled 3.293 million, an increase of 34,000 from the preceding week's level of 3.259 million.


At 3 p.m., the Federal Reserve is expected to report that consumer debt rose by $10 billion after soaring by $21.4 billion in March.


The FTSE in London was up 0.7%, and the DAX in Germany was up 0.6%. The Hang Seng Index in Hong Kong settled up 0.9%, and the Nikkei in Japan rose 1.2%.


The July crude oil contract was down 44 cents at $84.58 a barrel. August gold futures were falling $18.50 to $1,615.70 an ounce.


The benchmark 10-year Treasury was advancing 11/32, lowering the yield to 1.6%. The dollar was trading sideways, according to the dollar index.


In corporate news, Apple (AAPL) has moved to stop Samsung's sale of the Galaxy S III smartphone in the U.S.

 

Nasdaq (NDAQ) announced Wednesday a $40 million compensation plan for financial organizations that lost out in the botched Facebook (FB) IPO last month.

 

JM Smucker (SJM), the maker of jellies and jams, reported fourth-quarter net income Thursday of $104.1 million, or 93 cents a share, up from year-earlier earnings of $94.9 million, or 82 cents a share. Adjusted profit rose to $1.10 a share from $1 a share. Net sales for the fourth quarter were $1.36 billion.  On average, analysts expected earnings of $1 a share on sales of $1.36 billion. For fiscal year 2013, the company anticipates that net sales will increase 7% and non-GAAP earnings will be between $5 and $5.10 a share. The earnings projection excludes a cost of 50 cents a share for special projects.

 

Lululemon Athletica (LULU) reported first-quarter earnings of $46.6 million, or 32 cents a share, up from year-earlier earnings of $33.4 million, or 23 cents a share. The athletic wear retailer posted first-quarter revenue of $285.7 million. Analysts, on average, anticipated first-quarter earnings of 30 cents a share on revenue of $270.9 million.

 

More from TheStreet.com

 


 

142Comments
Jun 7, 2012 9:25AM
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"The major U.S. equity indices finished Wednesday's powerful 2%-plus rally on a high note as investors flooded into stocks on the hope that the Fed could soon signal its openness to another round of quantitative easing."

This is a really misleading statement.  The rally was not broad-based and most investors didn't go on a buying spree - less than a billion shares were traded on the NYSE yesterday...The majority of the active buyers were traders, positioning themselves for another round of QE.

All signs are pointing to a slowing economy, both here and in Europe - worse housing numbers, less job creation, sluggish growth in GDP, drop in manufacturing and productivity, lower consumer confidence, etc...  We've seen all of this a couple of times before - just prior to the Fed implementing QE1, QE2 and Operation Twist.  If QE1 was such a good idea, why the need for QE2?  And if QE2 was the right course of action, why the need for Operation Twist?  Now we're headed for the 4th round of monetary stimulus, because the first 3 rounds didn't work?  Clearly Bernanke is firmly entrenched in his positions, to the point that he will gladly inject tens of trillions of more dollars into the economy if it means not having to admit failure.  This cycle will not end until the Federal Reserve gets a new chairman...
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ROFL -- what a joke considering millions of college and high school grads just entered the market place with no jobs and the initial jobless rate still at 377,000 (to be revised to 390,000 in a couple of weeks) which is a rate of 1,000,000 plus jobs lost a month vs 69,000 being created.

 

What a joke folks the economy is still having close to 30 percent unemployment the government just keeps lowering how many people are in the work force to keep the unemplyment rate at 8.2 percent.

 

We are still in a death spiral of LOST JOBS and an EVER WEAKER AND WEAKER ECONOMY.

 

and they are trying to put lipstick on a pig still

 

QUOTE

 

WASHINGTON (Reuters) - The number of Americans lining up for new jobless benefits fell last week for the first time since April, a reminder that the wounded labor market is still slowly healing.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 377,000, the Labor Department said on Thursday. That was spot on the median forecast in a Reuters poll.

The government revised the prior week's figure up to 389,000 from the previously reported 383,000.

 

END QUOTE

Jun 7, 2012 10:09AM
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personally with interest rates at zero i do not feel confident with my financial security.  until interest rates go up, my confidence will not change.  i'll stay in "clam mode". 

 

i'm diversified in stocks (mutual funds), life insurance products, home about paid in full, a years's worth of cash in "liquid" form. 

 

i'm in better condition than most people i know.  yet if i feel weak about the situation now, HOW can those in worse financial shape ever feel better about things? 

 

i believe if the fed started raising their rates we'd see a shift in businesses.  it would signal "game on" and they'd start releasing their cash horde which would get jobs going again. 

 

the QE this or that HAS put the cash out there, but there is no incentive to spend it since rates are staying so low.  if rates inch up a little, there would be a "spend it now" type of reaction. 

Jun 7, 2012 9:48AM
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"Stocks surge on stimulus hopes"

 

The hope train is pulling out of the station again!

 

My instincts say invest in substance not form (hope).

 

I have some excess hope in my bank account, does anybody want to buy some? Hurry up before the Fed buys it.

Jun 7, 2012 9:53AM
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Hey Someone!!!  Can you please just........ go away.

 

Please do not attempt to converse with the "Spammer Bots" as it only makes it worse......

 

Thanks!

Jun 7, 2012 9:45AM
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Hey Someone!!!  Can you please just........ go away.
Jun 7, 2012 10:02AM
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Stocks surge on China rate cut ?   More B.S from Fraud Street=SCREW THE MIDDLE CLASS AND SMALL INVESTORS !
Jun 7, 2012 10:16AM
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brokers     run the market down 400 points  then back up 3 or 400 points   make a million dollars    Hard Work  lol    Crooks
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"The Labor Department reported Thursday that initial jobless claims for the week ended June 2 fell to 377,000 from the previous week's upwardly revised figure of 389,000." This is a BS number. There were not 12,000 fewer claims. They are comparing last weeks revised numbers to today's reported numbers. Today's numbers will be revise upwards, they always are. What needs to be compared is last week's reported numbers and this week's reported numbers. The last week reported number is 383K vs. todays reported number of 377K, only a 6,000 claim difference. Pathetic at best! Enjoy our 4th Annual Summer of Recovery, courtesy of Barack "Food Stamps" Obama!
Jun 7, 2012 10:29AM
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I'm still convinced there is a secret arrangement in regards to the new world order and the reducing trade barriers through international boundaries.  Does anyone else feel this suspicion?  Does it make more sense to change trade laws and keep our jobs, income, tax base here in our country?  The simple things are what we need to get answers to. Why have the Senators and Congress people become absolutely mum? Does it not seem so obvious free trade has been a dismal failure for most Americans yet not a beep from anyone in regards tariffs and trade restructuring? There is an answer that we are not privey to.  Anytime a government hides something from the citizens it is usually because if citizens actually knew they would not accept it. We have massive debt, unemployment, and a failing infrastructure that anyone with simple business moxey could see is directly attributable to the expulsion of our jobs and tax base. Do any of you feel answers from our elected officals are now necessary and important?

Jun 7, 2012 10:06AM
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Oh this is BEAUTIFUL!!!!!  Come on everyone...BUY- BUY- BUY!!!! You don't want to miss this once-in-a-lifetime opportunity!!!!
Jun 7, 2012 10:07AM
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Doda 52  (and everyone else),  for spammers like Someone just put your cursor on the lower right part of their message and Spam will appear, click Spam and if enough of us report maybe they will disappear
Jun 7, 2012 9:54AM
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doda52,

 

These are computer generated comments that are really annoying.  On almost every comment board I go on, there is one or two on there.  I don't know how it can be policed

Jun 7, 2012 10:40AM
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Quote:  With this, we encourage more savings and reward fiscal responsibility and self-reliance.

 

I think a lot of truth here.  With low interest rates and the dominance of the financial sector in our economy we have worshipped credit as a way to wealth.  The growth of financialization has shifted too much investment into leveraged speculative bets which have rewarded a few at the very top but done a lot of damage to the regular economy.  As Paul Volker said to an astonished group of Wall Street people, “I wish somebody would give me some shred of evidence linking financial innovation with a benefit to the economy.”

Jun 7, 2012 9:58AM
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Where are we going to borrow more money from to give it away again? Interest rates are already at record lows. Problem is nobody has any faith in our government to get our spending under control and create a positive environment for growth. We need someone to inspire us and make hard decisions like Reagan and all we have is Obama who is only good at wasting money and running up the deficit.
Jun 7, 2012 10:19AM
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Oh look!..... The markets are rising again. Hurry, hurry and invest,......... and then lose it all again. SUCKERS! LMAO
Jun 7, 2012 10:55AM
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We must ask ourselves, in the last hundred years, how have people improved their lot in life?  Most of them did it through savings, not debt.   Dirt poor farmers and sharecroppers and maids and cooks scrimped and saved every penny, to farm more land, open their own business or send their kids to college or move into a better neighborhood, etc...  They were able to save and leave wealth to the next generation, who continued to scrimp and save and improve their own lives and the lives of their children.  Now we have reached a point where savers are punished, and for the first time in generations, we are seeing less class mobility and improvement.  And for the first time in generations, as a whole, our seniors will be leaving behind less wealth and more debt than they inherited.
Jun 7, 2012 10:30AM
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ACTUAL UNEMPLOYMENT RATE 22.5%

GREAT DEPRESSION UNEMPLOYMENT RATE 24.9%

THAT'S ONLY 2.4% DIFFERENCE WHO'S FOOLING WHO?

Jun 7, 2012 10:23AM
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Wow ..

The Pump and Dump dudes have been working real hard last couple of days..

But still looks like ever thing is still based on..HOPES..

Don't invest your hard earned money with only ..HOPES ..?..being the reason

Jun 7, 2012 10:36AM
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If you want an eye opener - check out a historical chart on yields on the 10 yr over the past 30 years - the reasons for our rapid expansion and growth, that began in the early 80s, become crystal clear...it's all been based on cheap money!!
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