NEW YORK (CNNMoney.com) — Stocks rallied Thursday after the government reported a bigger-than-expected drop in jobless claims, and a number of retailers reported improved October sales.
The Dow Jones industrial average (INDU) gained 160 points, or 1.7%, almost three hours into the session, though that is off slightly from earlier highs. The S&P 500 (SPX) gained 14 points, or 1.4%, and the Nasdaq composite (COMP) climbed 40 points, or 2%.
“Today’s big news was that we saw fewer claims for unemployment benefits,” said Mike Stanfield, chief investment officer at VSR Financial Services. “That suggests that the underlying economics are continuing to improve.”
He said that this was reassuring to investors following several weeks of concerns about the pace of the recovery. It was also encouraging for investors ahead of Friday’s monthly employment report.
Stocks have been volatile over the past three weeks, with the S&P 500 losing 5% through Wednesday’s close on worries that the rally has gotten ahead of the recovery. Between March 9 and the peak on Oct. 19, the S&P 500 gained 63%.
Stocks ended mixed on Wednesday after the Federal Reserve held interest rates steady at historic lows near zero — and said it will keep them low for an extended period. But the decision was in line with expectations and had only a muted impact on stocks.
The issue for markets is whether there have been enough positive developments of late to give stocks another leg up, Stanfield said. He said he thinks that next leg could be delayed, and that stocks are likely to churn in a range for the next six months or so. After that point, investors will have a better sense of how the economy is doing without the benefit of trillions of dollars in government stimulus, which should help determine the next leg of the rally.
Gains were broad based, with 29 of 30 Dow issues rising, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500), Procter & Gamble (PG, Fortune 500), 3M (MMM, Fortune 500), United Technologies (UTX, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500).
Market breadth was positive. On the New York Stock Exchange, winners beat losers three to one on volume of 520 million shares. On the Nasdaq, advancers topped decliners by three to one on volume of 1.04 billion shares.
Full story: money.cnn.com
