NEW YORK – Wall Street extended its rally Thursday after a report showed new unemployment claims dropped last week.
The market remained upbeat a day after the Federal Reserve said it would pump more than $1 trillion into the economy. The Fed’s plans include the purchase of long-term Treasury bonds.
The Labor Department said the number of initial requests for unemployment insurance dropped to a seasonally adjusted 646,000 from the previous week’s revised figure of 658,000, better than economists’ expectations.
While the data is somewhat encouraging, it still shows the job market has far to go before it can be considered to be recovering, said Eric Thorne, an investment adviser at Bryn Mawr Trust.
“It’s a good sign the number was not quite as bad as expected,” Thorne said. “There were very low expectations though, which shows we’re still not out of the woods yet.”
The news was somewhat mixed as the number of people filing for more than a week set a new record for the eighth straight week, jumping 185,000 to a seasonally adjusted 5.47 million.
The Dow Jones industrial average rose 18.79, or 0.25 percent, to 7,505.37. The Standard & Poor’s 500 index rose 3.52, or 0.44 percent, to 797.87, while Nasdaq composite index rose 8.37, or 0.56 percent, to 1,499.59.
Markets are coming off their sixth gain in the past seven trading sessions, buoyed by a string of upbeat news. The latest was the Fed’s announcement it would pump more money into the economy to help revive the battered housing market, which has been a primary reason for the ongoing economic turmoil. The plan includes buying up to $300 billion of long-term government bonds during the next six months, which sent the bond market surging Wednesday as well. The Fed’s moves are aimed at driving down borrowing costs for everything from mortgages to credit cards.
Thorne said the Fed’s moves are an indication that the government is willing to take actions and make investments to help restore confidence in the financial system.
“The biggest piece we’re missing is the general confidence,” he said. Wednesday’s announcement is a move toward helping calm investors and consumers worries about whether the economy will begin to improve, he added.
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