Simply Politics & News

[Paule]

Stocks Rise After Jobless Claims Drop
Dec 14 2:19 PM US/Eastern

By MADLEN READ
AP Business Writer

NEW YORK

Wall Street resumed its fourth-quarter rally Thursday on a series of strong company earnings and a drop in unemployment claims. The Dow Jones industrials made their first foray past 12,400.
Investment firms Bear Stearns Cos. and Lehman Brothers Holdings Inc., Costco Wholesale Corp. and telecom equipment maker Ciena Corp. all had robust profits in the latest quarter, reinvigorating investors' confidence in the economy.

Wall Street, which has suffered from erratic trading in recent sessions, was also boosted by the Labor Department's report that Americans filing for unemployment benefits plunged for a second straight week. The data suggested the U.S. economy won't cool as quickly as some investors feared.

"As far as I can tell, consumers keep spending as long as unemployment is low," said Ed Peters, chief investment officer at PanAgora Asset Management Inc.

Airline stocks were pummeled by rising oil prices, after the Organization of Petroleum Exporting Countries said it would keep its oil production target stable for now but might make cuts in February. Overall, though, the stock market was unfazed by the possibility of higher fuel prices dampening consumer spending and hiking companies' materials costs.

In midafternoon trading, the Dow rose 79.79, or 0.65 percent, to 12,397.29, after hitting a new trading high of 12,402.26 earlier in the session.

Broader stock indicators also rose sharply. The Standard & Poor's 500 index was up 10.82, or 0.77 percent, at 1,424.03, after reaching a 6- year trading high of 1,424.89. The technology-laden Nasdaq composite index rose 22.86, or 0.94 percent, to 2,455.27.

Bond prices fell again Thursday, with the yield on the benchmark 10- year Treasury note rising to 4.59 percent from 4.58 percent late Wednesday. The dollar rose against other major currencies, and gold prices rose as well.

Oil prices shot higher after the OPEC announcement. Crude oil for January soared 98 cents to $62.35 a barrel on the New York Mercantile Exchange.

The tech sector got a boost from Ciena's robust profits and a forecast by Advanced Micro Devices Inc. of cost savings from its acquisition of ATI Technologies. Ciena, which makes equipment for fiber optic communication networks, rose $2.20, or 8.9 percent, to $27.17, and Advanced Micro gained $2.00, or 10 percent, to $22.17.

Investors were also cheered by Costco, which said late Thursday its profit in the latest quarter rose 10 percent. Costco, the nation's largest wholesale club operator, rose $1.18, or 2.2 percent, to $54.31.

The stock market had been moving cautiously over the past week, inching up and then pulling back after the Federal Reserve left interest rates steady on Tuesday and offered no hints that it might start lowering them. But Thursday's positive corporate and economic news sparked a resumption of stock buying, extending the Dow's upward climb to record territory. The Dow reached record territory for the first time in nearly seven years this fall, crossing 12,000 for the first time.

"We're in that Santa Claus rally time, and there's nothing to stop it today," said Arthur Hogan, chief market analyst at Jefferies & Co. He said the market seems to be looking past rising energy prices.

Though stocks have bounced back, the economic picture remains mixed, analysts said.

"There have been a few good earnings coming out, in addition to energy stocks rising because of oil," Peters said. "But it's also against the backdrop of bond yields rising and energy prices going up, which is negative for everybody."

Higher energy prices were a boon to oil companies' stocks, pushing Chevron Corp. up $1.22 to $75.61; ConocoPhillips up $2.15 to $73.15; and ExxonMobil Corp. up $1.19 to $78.55.

But airlines buckled under the prospect of higher fuel costs. Continental Airlines Inc. fell 20 cents to $44.56; Southwest Airlines Co. fell 24 cents to $15.70; and UAL Corp., parent company of United Airlines, fell 94 cents, or 2.1 percent, to $44.30.

Bear Stearns climbed $4.05, or 2.6 percent, to $159.94 on its strong financial results. Lehman Brothers slipped 68 cents to $75.70, as investors were slightly disappointed that the firm did not produce record fourth-quarter profits, as its rivals Bear Stearns and Goldman Sachs Group Inc. did. Goldman reported record results on Tuesday.

The Russell 2000 index of smaller companies was up 6.81, or 0.86 percent, at 795.56.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 939.5 million shares.

U.S. stocks aren't the only equities that have had a sharp rally lately. Chinese stocks on Thursday hit record highs, with the Shanghai Composite Index gaining 1.2 percent to close at 2,249.11, its highest closing level ever. It hit a trading high of 2,250.32, up from the previous record of 2,245.43, reached back in June 2001.

Australian and New Zealand markets also rallied to new records Thursday.

In other overseas markets, Japan's Nikkei stock average closed up 0.82 percent. Britain's FTSE 100 closed up 0.57 percent, Germany's DAX index closed up 0.49 percent, and France's CAC-40 closed up 0.62 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com