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Monday, April 12, 2021

Stocks jump as jobs, productivity data boost mood

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Encouraging news on jobs and worker productivity gave investors new reason to be optimistic about a recovery in the economy and pushed stocks to big gains.

The Dow Jones industrial average jumped 180 points, while the Nasdaq composite index, which has a concentration of technology stocks, rose more than 2 percent after an upbeat forecast from Cisco Systems Inc.

The Labor Department said the number of newly laid-off workers seeking unemployment benefits fell to 512,000 last week, the lowest level since January and fewer than the 523,000 economists had forecast.

Initial claims are considered a gauge of the pace of layoffs and an indication of employers’ willingness to hire workers. The report offered investors hope that the government’s monthly report on employment Friday might prove better than expected. Analysts project that the unemployment rate rose to 9.9 percent in October.

Investors also cheered the biggest jump in productivity in six years. The government said the amount of output per hour worked rose 9.5 percent in the July-September quarter. Getting more from each worker could make companies put off hiring workers but the lower costs will boost profits as the economy recovers.

Meanwhile, retailers posted their second straight month of sales gains in October after more than a year of declines, providing hope that consumers are starting to spend a little more.

“The news coming in has been for the most part better than expected,” said Mike Boyle, senior vice president and portfolio manager at Advisors Asset Management.

In late morning trading, the Dow average surged 183.87, or 1.9 percent, to 9,986.01. The broader Standard & Poor’s 500 index rose 17.30, or 1.7 percent, to 1,063.80, while the Nasdaq rose 46.71, or 2.3 percent, to 2,102.23.

Bond prices were mixed. The benchmark 10-year Treasury note fell, pushing its yield up to 3.55 percent from 3.53 percent late Wednesday.

Mixed messages from economic data in recent weeks have made it difficult for investors to get a sense of where the economy is headed, leading to increasingly choppy trading. The Federal Reserve pointed to hopeful signs on Wednesday but also said it would keep interest rates low for “an extended period” to help stimulate growth.

Low interest rates have been one of the drivers in the stock market’s more than 50 percent gain since March, encouraging investors to search for assets with higher yields than cash. But money managers also worry that the Fed’s pledge to keep rates low signals that the central bank believes the recovery is fragile.

Traders initially cheered the Fed’s assessment of the economy on Wednesday, building on momentum stoked by better reports on activity in the service sector and private sector employment. Stocks failed to hold on to those gains, however, and the Dow finished with a gain of about 30 points, having risen as much as 156 points after the Fed announcement.

While the market often jumps at good news, it has become more difficult for the gains to stick.

Investors can’t shake the fear that government stimulus programs have become a crutch for the economy and that the 3.5 percent growth in the third quarter won’t be sustainable as stimulus measures are removed.

Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 353.3 million shares compared with 361.3 million shares traded at the same point Wednesday.

Cisco pulled tech stocks higher after the maker of computer-networking gear said late Wednesday that it expects revenue to grow for the first time in a year for the quarter ending in January. The stock rose 57 cents, or 2.5 percent, to $23.86.

Among early retail sales reports, Costco Wholesale Corp. posted a 5 percent jump in sales at stores open at least a year, a key gauge of a retailer’s health. Costco rose 16 cents to $58.97.

The dollar fell against other major currencies. Gold prices rose.

Light, sweet crude fell 24 cents to $80.16 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 13.90, or 2.5 percent, to 577.02.

Overseas, Asian markets fell overnight, while European shares recovered from early losses in afternoon trading and moved higher after central banks left their interest rates unchanged. The Bank of England also said it would pump more money into the economy after news last week that the country remains in recession.

Britain’s FTSE 100 rose 0.9 percent, Germany’s DAX index added 1.2 percent, and France’s CAC-40 gained 1.5 percent. Earlier Thursday, Japan’s Nikkei stock average fell 1.3 percent.

© 2009 Associated Press. Displayed by permission. All rights reserved.

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