U.S. stocks closed broadly higher Thursday, as reports on initial jobless claims and productivity in the non-farm business sector supported investors' hopes for an economic recovery ahead of Friday's May U.S. employment report.
On Thursday, the 30-stock Dow Jones industrial average finished higher by 74.96 points, or 0.86%, at 8,750.24. The broad Standard & Poor's 500 index gained 10.70 points, or 1.15%, to 942.46. The tech-heavy Nasdaq composite index added 24.10 points, or 1.32%, to 1,844.53.
Banks and energy stocks were among the best performers in Thursday's session.
Treasuries were off sharply. The dollar index was lower, helping gold futures to rally. Crude oil futures were up sharply.
While No. 1 retailer Wal-Mart (WMT) has ceased filing monthly sales reports, the rest of the sector will be releasing data over Thursday's session. Among the retailers whose shares slipped in Thursday's session after releasing disappointing figures: May sales: Target (TGT), Abercrombie & Fitch (ANF), Costco (COST), Hot Topic (HOTT), Family Dollar Stores (FDO), Dillards (DDS), Nordstrom (JWN), Macy's (M), BJ's Wholesale (BJ), Childern's Place (PLCE), and Limited Brands (LTD).
Goldman Sachs raised its year-end oil price target to $85 per barrel from $65, with its analysts looking for crude to climb to $95 by the end of 2010.
U.S. jobless claims fell 4,000 to 621,000 in the week ended May 30, from a revised 625, level for the week ended May 23 (was 623,000). The 4-week moving average rose to 631,250 from 627,250. Continuing claims fell for the first time in 18 weeks, dropping 15,000 to 6,735,000 from a revised 6,750,000 (was 6,788,000).
U.S. nonfarm productivity growth was revised up to 1.6% in the first quarter (vs. economists' median forecast of +1.2%) from the preliminary figure of 0.8%. It follows a 0.6% drop in the fourth quarter. Compensation growth was bumped to 4.6% from 4.1%. And unit labor cost gains were revised down to 3.0% from 3.3%, close to expectations.
The Monster Employment Index edged two points lower in May, as U.S. online recruitment activity eased slightly following a seasonal rise in April. During May, online job availability rose in just three of the Index's 20 industry sectors. Educational services, retail trade and public administration were the only three industry categories to register an increase in online job availability in May. Demand for educational services reached its highest level this year possibly amid still-robust private-sector job creation and increased funding from the government for workforce retraining purposes. The retail trade industry also registered a rise, though overall demand in this industry has remained relatively muted this year as employers are waiting for real signs of a turnaround in consumer confidence and spending before making significant staffing additions.
European markets rose Thursday after two days of losses; both the Bank of England and the European Central Bank left key lending rates unchanged. Investors awaited details of the ECB's plan to buy around €60 billion of covered bonds in order to boost credit conditions. The ECB continues to focus on the banking channel with its non-standard measures. With confidence data suggesting that growth has bottomed out we are not expecting further rate cuts, or additional asset purchases in the central scenario. Officials have also stressed the need for an appropriate exit strategy once the economy starts to turn around and the first rate hike could come earlier than expected.