Wall St up on surprise US jobless drop
WALL Street gained after a surprise drop in US jobless claims underpinned expectations the economy is improving albeit at a rate slow enough for the Federal Reserve to maintain its stimulus.
In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.19 per cent, the Standard & Poor's 500 Index added 0.11 per cent, and the Nasdaq Composite Index advanced 0.53 per cent.
Gains in shares of Verizon and Visa, each up 1.3 per cent, led the Dow higher.
The number of Americans filing applications for unemployment benefits unexpectedly declined last week, bolstering cautious optimism about the recovery in the jobs market. Jobless claims fell 5,000 to 305,000 in the week ended September 21, according to Labor Department data.
"We definitely have seen a gentle downtrend in claims over the course of the year," Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut, told Bloomberg News. "Unfortunately, the problem for the labour market for a long time has not really been the pace of layoffs, it's been the slow pace of hiring."
Separately, US gross domestic product grew at a 2.5 per cent annualised rate in the second quarter, unrevised from an earlier estimate and up from a 1.1 per cent pace in the first, according to the Commerce Department.
Even so, the National Association of Realtors' index of pending home sale fell a larger-than-expected 1.6 per cent in August because of rising mortgage rates and home prices, showing the pace of recovery is slowing.
"The housing market is not rolling over, but it does seem to be losing steam," Ian Shepherdson, an economist at Pantheon Macroeconomics in White Plains, New York, told Reuters.
Economists polled by Bloomberg had predicted a drop of 1 per cent.
"Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalised last month," Lawrence Yun, NAR chief economist, said in a statement. "Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead."
Meanwhile, today's auction of US$29 billion in seven-year government debt drew tepid demand. The notes yielded 2.058 per cent.
"It was a lacklustre auction," Ian Lyngen, a government-bond strategist at CRT Capital Group in Stamford, Connecticut, told Bloomberg News. "We've seen gains for the last four consecutive sessions. Thursday is a bit of a give-back on the recent gains."
Shares of JC Penney rebounded, last up 3 per cent at US$10.42, after CNBC reported CEO Myron Ullman told investors he did not see the need to raise cash this year. The retailer's stock had shed more than a quarter of its value in the previous six sessions amid liquidity concerns.
In Europe, the Stoxx 600 Index ended the day unchanged from the previous close. The UK's FTSE 100 gained 0.2 per cent. Germany's DAX slipped nearly 0.1 per cent while France's CAC 40 shed 0.2 per cent.