(Corrects company name in 7th paragraph for story that moved earlier.)
The Dow Jones Industrial Average climbed to another record high as the number of Americans who filed for unemployment benefits fell to a six-week low, showing further improvement in the labor market.
Bank of America Corp. rallied 2.4 percent as financial stocks advanced. Ciena Corp. (CIEN:US) and JDS Uniphase Corp. surged at least 7.5 percent as Ciena posted quarterly earnings that topped estimates. Colgate-Palmolive Co. (CL:US) jumped 0.5 percent after approving a two-for-one stock split and boosting its dividend. PetSmart Inc. (PETM:US) tumbled 6.9 percent as forecasts for earnings and sales growth missed projections.
The Standard & Poor’s 500 Index (SPX) added 0.2 percent to 1,544.79, the highest level on a closing basis since Oct. 31, 2007, at 11:43 a.m. in New York. The Dow rose 45.92 points, or 0.3 percent, to a record 14,342.16 today. Trading in S&P 500 companies was 12 percent below the 30-day average at this time of day.
“There’s an underlying element of support for the labor market and it’s really driven by housing and potentially construction finally coming back,” Robert Lutts, chief investment officer of Cabot Money Management in Boston, which manages $500 million, said in a telephone interview. “We’re starting to see some health in some of those dormant areas of the economy, so quantitative easing and lower interest rates are finally having an impact and the stock market is of course telling us that.”
First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data today from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. The four-week average dropped to a five-year low.
A Labor Department report tomorrow may show nonfarm payrolls rose by 163,000 last month, while the unemployment rate held at 7.9 percent, according to economists in a Bloomberg survey.
“The general employment picture in the U.S. has stabilized,” Troy Logan, chief economist at Exton, Pennsylvania-based Warren Financial Service, said. “We’re still at a very high level of unemployment and underemployment, but it’s not getting worse and that’s a key factor.”
The trade deficit in the U.S. widened more than forecast in January as demand for imported crude oil rebounded. The gap grew by 16.5 percent to $44.4 billion from $38.1 billion in December that was the smallest in three years, Commerce Department figures showed today in Washington.
European Central Bank President Mario Draghi stuck to his view that the euro-area economy will gradually recover later this year. The ECB today predicted the 17-nation economy will shrink 0.4 percent this year, more than the 0.3 percent contraction forecast three months ago. The central bank lowered its 2014 inflation projection to 1.3 percent from 1.4 percent.
While risks to the economic outlook are on the downside, risks to the inflation outlook remain “broadly balanced,” Draghi said.
The Dow extended a record high yesterday as a private report showed companies hired more workers than estimated and the Federal Reserve said the economy is growing. The S&P 500 has reached its highest level since October 2007, just 1.3 percent below a record as the bull market enters its fifth year.
The benchmark index has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Fed embarked on three rounds of bond purchases to stimulate the economy.
“We’ve called this whole market the bunker bull market, meaning people are still in the bunker and not really believing it quite yet,” Brian Belski, the New York-based chief investment strategist at BMO Capital Markets, said in a radio interview with Tom Keene and Michael McKee on “Bloomberg Surveillance.” “When people find out and realize they’re losing money for several months in a row, and they’ll see the positive returns in stocks, they’ll come back.”
Financial companies rallied the most out of 10 S&P 500 groups, jumping 0.5 percent. Twenty-one of 24 members in the KBW Bank Index (BKX) rose, as the gauge climbed 1 percent to its highest level since May 2010. Bank of America, the second-largest U.S. lender, added 2.4 percent to $12.21.
Investors bought shares of companies tied to economic growth, sending material, energy and industrial stocks percent higher among S&P 500 groups. Alcoa Inc. added 0.6 percent to $8.62.
Ciena surged 16 percent to $17.37. The maker of fiber-optic networking equipment reported first-quarter profit (CIEN:US) of 12 cents a share, compared with a 14-cent loss estimated by analysts on average. Revenue in the period also beat projections. Rival JDS Uniphase added 7.5 percent to $15.22.
Colgate-Palmolive increased 0.5 percent to $115.96. The maker (CL:US) of Irish Spring soap and Ajax house cleaners approved a two-for-one stock split and boosted its dividend 9.7 percent.
Smithfield Foods Inc. rallied 9.5 percent to $24.43. The pork producer posted third-quarter adjusted earnings of 58 cents a share, topping the average analyst estimate of 50 cents.
Time Warner (TWX:US) Inc. climbed 1 percent to $56.03 after saying its board authorized managers to later this year spin off the magazine unit, which publishes Time, People and Sports Illustrated, into a separate publicly held company. The sale will help Time Warner to focus on its film- and TV-production businesses, Chief Executive Officer Jeff Bewkes said.
Boeing Co. jumped 3 percent to $81.48, its highest intraday level since June 2008. Emirates, the largest operator of Boeing’s 777 aircraft, said the U.S. manufacturer is getting closer to offering a new version that will seek to defend its lead against Airbus SAS in the wide-body market.
Apache Corp. advanced 3.3 percent to $75.96 as the fourth- largest U.S. independent oil and gas producer by market value may begin a process to sell deep-water assets in the Gulf of Mexico as early as next week, a person familiar with the matter said.
PetSmart tumbled 6.9 percent to $61.96 after forecasting sales growth of 2 percent to 4 percent in 2013, implying revenue of $6.89 billion to $7.03 billion. That missed the average analyst estimate (PETM:US) of $7.08 billion. The company also forecast earnings of no more than $3.92 a share, compared with the average analyst projection of $3.94 a share.
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