Stocks surge on strong economic data and weaker oil
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The bulls are running again on Wall Street as oil prices ease and fresh data point to surprising strength in the U.S. economy.
The Dow Jones industrial average was up 183 points, or 1.5%, to 12,249 at about 10:45 a.m. PST, which if it holds would be the biggest one-day gain since Dec. 1. The broader market also was sharply higher.
[Updated at 1:10 p.m. PST: The Dow closed up 191.40 points, or 1.6%, to 12,258.20, leaving it just 1% below the 2 1/2-year high reached on Feb. 18.]
Stocks surged at the opening bell after the government said new claims for jobless benefits (charted below) fell to 368,000 last week, the lowest level since May 2008.
That stoked hopes that the Labor Department’s report on February employment, due Friday morning, will show a big boost in job creation for the month.
Jobs, of course, have been the missing link in the economic recovery. Wall Street bulls have been insisting that the numbers would begin to improve significantly in the first half of this year. The unemployment-claims data bolstered that view.
With the continuing slide in new claims, “There must be a lot of new jobs getting created out there,” said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi in New York.
Analysts’ consensus forecast is for a net gain of about 200,000 non-farm jobs in February, but Rupkey said the claims data suggest that a gain of 300,000 jobs for the month “is not impossible.”
Job growth in January was dismal, as non-farm payrolls rose by just 36,000. But many analysts blamed the brutal winter weather in much of the country that month, and predicted that employment gains would pick up in February and beyond.
‘The case for payroll growth accelerating to 150,000 [jobs] or more per month is now very strong,’ said Tony Crescenzi, a strategist at money manager Pimco in Newport Beach. Non-farm payrolls grew by an average of 128,000 a month in the fourth quarter, after an average monthly loss of 45,000 jobs in the third quarter.
Other reports on Thursday also pointed to underlying strength in the economy, at least before oil prices surged last week.
The Institute for Supply Management’s index of activity in the service sector rose in February for a sixth straight month. And major retailers reported solid sales gains for the month.
Stocks also were helped as oil prices fell back modestly. Near-term crude futures in New York were down $1.49 to $100.74 a barrel on reports that Libyan strongman Moammar Kadafi had accepted a proposal from Venezuelan President Hugo Chavez for a commission to mediate Libya’s civil war.
Crude hit a 2 1/2-year high of $102.23 a barrel on Wednesday amid continued heavy fighting beween Libyan rebels and forces loyal to Kadafi. Oil has rocketed from $86 a barrel on Feb. 18 as unrest has escalated in the Middle East and North Africa.
-- Tom Petruno