Manufacturing Growth Offsets Jobless Rate, Lifts Stocks
The stock market edged higher as news of stronger regional manufacturing offset concerns about unemployment and weak sales at Wal-Mart.
Stocks rose Thursday for a third straight day. The Dow Jones industrial average has gained more than 200 points this week.
Treasury prices fell as improvements in some economic reports eased demand for safe havens.
The Philadelphia Federal Reserve said manufacturing in its region is improving. The Philly Fed’s manufacturing index rose to 17.6 in February from 15.2 in January. That follows reports the past two days that also pointed to a pickup in business at the nation’s factories.
The report lifted stocks of companies that process raw materials because increased manufacturing should boost sales. Newmont Mining Corp. and glass maker Owens-Illinois Inc. each rose more than 2 percent.
The market’s advance was limited by a Labor Department report that the number of workers seeking unemployment benefits for the first time rose 31,000 to 473,000 last week. Economists polled by Thomson Reuters forecast claims would fall. Unemployment is a major obstacle to a sustained recovery.
Meanwhile, Wal-Mart Stores Inc. reported a drop in quarterly sales at its flagship U.S. stores and issued a disappointing forecast.
Investors have been buying stocks this week on growing evidence of growth in the U.S. economy. They seem to have stopped worrying, at least for now, about potential overseas troubles derailing a global recovery. Investors have been concerned that debt problems in Greece and other European countries could spread. China’s move to tighten lending standards and slow its growth to avoid speculative bubbles has also worried investors.
Eric Mintz, assistant portfolio manager of the Eagle Mid Cap Growth Fund in St. Petersburg, Fla., said traders were able to look past the latest jobs report because heavy snow in parts of the country has skewed some of the numbers to make unemployment look worse. He said the bulk of economic reports still signal the economy is improving.
“We’re in the early phases of the recovery and you are going to get spotty data,” he said.
In midafternoon trading, the Dow rose 36.13, or 0.4 percent, to 10,345.37. The broader Standard & Poor’s 500 index rose 3.00, or 0.3 percent, to 1,102.51, and the Nasdaq composite index rose 5.67, or 0.3 percent, to 2,231.96.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.80 percent from 3.74 percent compared late Wednesday.
The dollar mostly rose against other major currencies.
Gold fell, while crude oil rose $1.47 to $78.80 per barrel on the New York Mercantile Exchange.
Earnings reports were mixed. Wal-Mart reported a fourth-quarter profit that topped analysts’ expectations. But sales at stores open at least a year fell. The company predicted sales at stores open a year will be down as much as 1 percent or up as much as 1 percent for its U.S. namesake stores this year. The stock fell 91 cents, or 1.7 percent, to $53.15.
Hewlett-Packard Co. reported a better-than-expected fiscal first quarter after the market closed Wednesday. The computer and technology company, which like Wal-Mart is a component of the Dow, also forecast full-year revenue and profit that exceeds analysts’ expectations. Its shares rose 37 cents, or 0.7 percent, to $50.49.
Newmont Mining rose $1.18, or 2.5 percent, to $48.42, while Owens-Illinois rose 70 cents, or 2.6 percent, to $27.85.
Four stocks rose for every three that fell on the New York Stock Exchange, where volume came to 409.4 million shares compared with 488.3 million shares traded at the same point Wednesday.
The Russell 2000 index of smaller companies rose 0.44, or 0.1 percent, to 625.27.
Britain’s FTSE 100 rose 0.9 percent, Germany’s DAX index and France’s CAC-40 each rose 0.6 percent. Japan’s Nikkei stock average rose 0.3 percent.
2/18/2010 2:20 PM STEPHEN BERNARD, TIM PARADIS,AP Business Writers NEW YORK