Fall in jobless claims lifts US stocks

NEW YORK: US stock markets opened higher on Thursday as an unexpected improvement in jobless claims dispelled gloom about the debt-ceiling debacle in Washington.

The Dow Jones Industrial Average gained 18.43 points (0.15 percent) to stand at 12,320.98 after the first half-hour of trading.

The broader S&P 500 rose 1.96 points (0.15 percent) to 1,306.85, while the tech-heavy Nasdaq Composite climbed 7.06 points (0.26 percent) to 2,771.85.

Early on Thursday the US Labor Department reported that new claims for unemployment benefits fell to 398,000 last week, their lowest level in nearly four months and the first time they had fallen below 400,000 since early April.

"The latest initial claims report brought a measure of good news," said Patrick O'Hare, an analyst with Briefing.com. "Importantly, there were no special factors behind the improvement."

That boosted investor sentiment after a nasty sell-off on Wednesday in which the Dow fell 1.59 percent, the S&P 500 dropped 2.03 percent and the Nasdaq plunged 2.65 percent.

Markets fell for three straight days from Monday to Wednesday amid fear that Congress might fail to raise the government's $14.29 trillion debt ceiling before a deadline set by the US Treasury for next Tuesday.

The Treasury says that if the debt ceiling is not raised by that day, the United States could be forced to default on its debts, which would potentially have catastrophic effects on financial markets.

Investors were also paying close attention to quarterly earnings reports from a number of major companies on Thursday.

ExxonMobil dropped 2.2 percent after the oil and gas giant reported second-quarter profits that surged 41 percent from a year ago but fell short of analysts' forecasts due to high capital and exploration expenses.

Goodyear rallied 2.6 percent after the tire and rubber company turned in a 24 percent rise in quarterly revenues to a record $5.6 billion, beating expectations.

Other companies that exceeded analysts' forecasts were pharmaceuticals giant Bristol Myers Squibb, whose shares were up 2.0 percent; defense contractor Raytheon, up 1.1 percent; and Colgate-Palmolive, up 0.2 percent.

Bond prices rose. The yield on the 10-year Treasury fell to 2.95 percent from 2.98 percent late on Wednesday, while the 30-year bond stayed roughly unchanged at around 4.28 percent.

Bond prices and yields move in opposite directions.

Copyright AFP (Agence France-Presse), 2011