Retail, Jobless Data Boosts Sentiment on Wall Street
A better-than-expected report on jobless claims and growth in retail sales are helping to push stocks higher in the opening moments of trading.
The Dow Jones industrial average is up 47 at 8,786. The Standard & Poor’s 500 index is up 5 at 944, while the Nasdaq composite index is up 5 at 1,859.
Investors have been latching on to signs of improvement in the economy to push stocks higher over the past three months, although rising interest rates have recently become a concern.
A Labor Department report showed people filing first-time jobless benefits claims fell to 601,000, beating economists’ expectations.
The Commerce Department says retail sales increased 0.5 percent in May, reversing after two months of declines.
Amid the market’s recent three-month rally, investors had latched on to any signs that economic deterioration was lessening to help push stocks higher.
Ahead of the opening bell, Dow Jones industrial average futures had fallen 20, or 0.23 percent, to 8,734. Standard & Poor’s 500 index futures declined 3.00, or 0.32 percent, to 937.50, while Nasdaq 100 index futures slipped 4.00, or 0.27 percent, to 1,491.75.
The Labor Department said number of newly laid-off Americans filing for jobless benefits fell to a seasonally adjusted 601,000, better than the 615,000 expected by economists polled by Thomson Reuters.
Despite that relative improvement, the number of unemployed continuing to file for claims rose to 6.8 million, the highest on records dating to 1967.
The Commerce Department said retail sales volume increased 0.5 percent in May, ending a two-month streak of declines. The results were in line with economists’ expectations. It was the largest increase in retail sales since a 1.7 percent increase in January.
Retail sales are seen as a key indicator of economic improvement because consumer spending accounts for more than two-thirds of economic activity. It is widely believed that improved spending is needed to help end the ongoing recession.
Doug Lockwood, chief investment officer at Cornerstone Wealth Management said retail sales growth is one of the biggest indicators that economic deterioration might be lessening. An increase in spending shows consumers might be gaining confidence in the current economic environment and are more willing to purchase goods.
“There has been a lot of rallying and rebounding going on, but we have to continue to see improvements,” Lockwood said. Lockwood noted that conditions are still fragile though, so data or signs that might show an economic recovery will not be as strong or quick as previously expected could weigh on investors.
Growing concerns about rising interest rates is one indicator putting a damper on investors’ moods. The market is trying to shake off fresh concerns about rising rates, which could hinder any improvement in consumer spending and slow a recovery. The U.S. growing debt burden and rising rates could curtail home refinancings, Lockwood said.
Stocks fell moderately Wednesday after the government sold $19 billion in 10-year Treasury notes in a relatively weak auction. There were plenty of bidders, but the government had to lure them in with a higher yield than the market anticipated.
On Wednesday, the Dow dipped 24 points, while the S&P 500 fell about 3 points.
Another round of Treasury note auctions is scheduled for Thursday, which could provide additional insight into the movement of interest rates. The government is scheduled to auction $11 billion in 30-year bonds.
Bond prices fell Thursday morning. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.97 percent from 3.96 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18 percent from 0.17 percent late Wednesday.
A weakening dollar has also added to inflationary fears because it can drive up the price of imported goods and commodities. The dollar fell against other major currencies, while gold prices rose. Oil prices rose 66 cents to $71.99 a barrel in premarket electronic trading on the New York Mercantile Exchange.
Meanwhile, overseas, Japan’s Nikkei stock average fell 0.1 percent. In afternoon trading, Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index gained 0.5 percent, and France’s CAC-40 fell 0.3 percent.
6/11/2009 9:45 AM STEPHEN BERNARD AP Business Writer NEW YORK