Stocks climb higher after Alcoa report, jobs data
NEW YORK — Stocks are higher after Alcoa kicked off earnings season with an unexpected profit and initial claims for jobless benefits fell more than expected.
Sales at a number of big retailers, meanwhile, are coming in better than Wall Street expected. Still, most stores posted sales declines, though smaller than in recent months.
Investors are cheering a report from Alcoa Inc. showing its first profit in nine months.
And the Labor Department says new claims for jobless benefits fell to 521,000 last week, down from the previous week’s upwardly revised total of 554,000 and better than analysts had expected.
The Dow Jones industrials are up 50 at 9,775. The Standard & Poor’s 500 index is up 5 at 1,062, while the Nasdaq composite index is up 10 at 2,120.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
NEW YORK (AP) — Stocks appear headed to a sharply higher opening Thursday after Alcoa kicked off earnings season with an unexpected profit and weekly jobless claims fell more than expected.
A number of big retailers, meanwhile, reported lower September sales at stores open at least a year but some still beat analysts’ expectations.
U.S. stock futures rose, extending a rally overseas following the upbeat report from Alcoa.
The Labor Department said new claims for jobless benefits fell to 521,000 last week, down from the previous week’s upwardly revised total of 554,000. It was the lowest level seen since early January, providing further evidence that the nation’s job crunch is easing and the economy is starting to recover.
Economists polled by Thomson Reuters were expecting new claims to fall to 540,000.
The number of people continuing to claim benefits fell to 6.04 million. Analysts expected continuing claims to rise slightly.
Ahead of Thursday’s market opening, Dow Jones industrial average futures rose 68, or 0.7 percent, to 9,741. Standard & Poor’s 500 index futures rose 8.90, or 0.8 percent, to 1,062.50, while Nasdaq 100 index futures rose 12.00, or 0.7 percent, to 1,720.00.
Futures had been even higher earlier after aluminum company Alcoa Inc. surprised investors following the market’s close Wednesday by reporting its first profit in nine months. The profit of $77 million, or 8 cents per share, was due to cost cutting and rising sales to automakers. Alcoa also said worldwide aluminum demand is expected to increase by 11 percent for the second half of the year.
“Alcoa set the tone and backed it up,” Michael Feser, president of Zecco Trading said of the company’s quarterly results.
Traditionally the company to start earnings season, Alcoa’s better-than-expected report and upbeat demand prediction reassured investors that the economic recovery is well under way.
Investors will be examining earnings reports in upcoming weeks for more signs of growth in the economy. Companies mostly beat modest earnings expectations during the second quarter because of cost-cutting measures.
“The third quarter is being looked at as, is this recovery for real? We have to see earnings above and beyond cost cutting,” Feser said.
Investors are focusing on sales and revenue growth to bolster profits in the third quarter. Any forecasts from companies will also be closely watched to see where executives believe the economy is headed.
New data from retailers shows sales are still falling amid ongoing concerns about the economy. However, despite the weakness, sales from many companies have topped expectations.
Teen retailer Wet Seal Inc. and Macy’s Inc. reported smaller-than-expected declines in sales at stores opened at least a year. The measure is considered a key indicator of a retailer’s health.
Consumer spending accounts for more than two-thirds of all economic activity, so improvement in retail sales would provide further evidence of a rebound.
Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.18 percent from 3.19 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.05 percent.
The dollar continued its fall against other major currencies. Gold prices continued to climb higher on the weakness of the dollar. Gold again hit a new record Thursday morning, rising as high as $1,059.60 an ounce.
Overseas, Japan’s Nikkei stock average rose 0.3 percent. In afternoon trading, Britain’s FTSE 100 gained 0.6 percent, Germany’s DAX index rose 1.2 percent, and France’s CAC-40 jumped 1.2 percent.
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