Stocks Rise Following Better-Than-Expected Reading on Jobless Claims

Stocks advanced Thursday, led by strong gains among the blue chips, after fewer-than-expected workers sought unemployment benefits last week and on word of progress in talks between automakers and workers over health care costs.
The Dow Jones industrial average rose more than 100 points on strong advances by General Motors Corp. and McDonald's Corp. Technology stocks and small-capitalization issues lagged, however, while bond prices fell.
The Labor Department reported claims for unemployment benefits rose by 4,000 last week to 319,000 -- the sixth increase in seven weeks -- but the number was less than the 325,000 claims analysts expected. Low unemployment, at 4.6 percent, has been one of the economy's strengths.
Shares of GM jumped sharply after The Wall Street Journal reported that UAW President Ron Gettelfinger has said he might agree to establishing a trust fund for employee health care costs that would be run by the union. Ford Motor Co. rose as well.
"Whereas U.S. growth may be dented and it may skate near or into a recession it's not going to have a major impact on world growth," said John Merrill, chief investment officer of Tanglewood Capital Management in Houston. He said investors are gravitating toward larger-capitalization stocks because of stock-specific news from GM and McDonald's, but also because of the health of overseas economies where big companies do much of their business.
"If McDonald's was just a U.S. company it would not look as healthy as it does today," he said.
In late morning trading, the Dow rose 144.45, or 1.09 percent, to 13,436.10.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 14.48, or 0.98 percent, to 1,486.04, and the Nasdaq composite index rose 13.08, or 0.50 percent, to 2,605.15.
Government bond prices fell. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.46 percent from 4.41 percent late Wednesday.
In the commodities market, crude oil prices backed off the all-time high of more than $80 a barrel marked on Wednesday. Light, sweet crude fell 66 cents to $79.25 on the New York Mercantile Exchange.
Gold prices fell as the U.S. dollar bounced off an all-time low against the euro on Thursday. The 13-nation currency fetched $1.388 amid expectations for a U.S. interest rate cut.
The rise in jobless claims follows last week's reading on August payrolls, which declined for the first time in four years and sent stocks plummeting amid worries that credit tightness and market turmoil had hit the labor market. But Thursday's report was temperate enough to assuage investors.
On Wednesday, investors had refrained from major moves ahead of Tuesday's meeting of the Federal Reserve; Wall Street has grown more confident the Fed will cut its benchmark federal funds rate by a quarter percentage point.
The Fed on Thursday also continued its campaign of trying to ensure adequate liquidity enters the banking system. The New York Fed, which carries out the central bank's market operation, on Thursday injected $21 billion in three repurchase agreements. On Wednesday the Fed added $13.5 billion. The central bank has added money to the banking system in recent months and has lowered its discount rate -- the charge on its loans to commercial banks -- as it has sought to alleviate pressures in the credit market.
In corporate news, investors also applauded apparent progress in Detroit over health care costs for autoworkers. GM rose $1.85, or 6.2 percent, to $32.10, while Ford rose 24 cents, or 3.3 percent, to $7.74.
McDonald's advanced $3.20, or 6.3 percent, to $54.40 after increasing its dividend 50 percent a day after reporting stronger-than-expected sales for August.
Target Corp. rose $1.56, or 2.5 percent, to $64.28 after announcing plans to review whether it should retain its $7 billion in credit card receivables.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 400.1 million shares.
The Russell 2000 index of smaller companies rose 2.73, or 0.35 percent, 780.63. Wall Street, still concerned about the effects of an economic slowdown, gravitated toward larger capitalization stocks amid the news from GM and McDonald's but also perhaps because investors often regard big companies as better able to withstand an economic slowdown. Investors cite overseas sales and the ability to get by on thinner profit margins.
European equity markets advanced, recovering from earlier declines. Britain's FTSE 100 added 0.66 percent, Germany's DAX index rose 0.51 percent and France's CAC-40 rose 1.13 percent.
In Asia, Japan's Nikkei stock average ended modestly higher, up 0.15 percent, while Hong Kong's Hang Seng Index rose 0.93 percent.