- The Washington Times - Thursday, April 2, 2009

UPDATED:

Wall Street extended its rally Thursday, with the Dow Jones Industrial Average breaking the 8,000 mark for much of the day amid more upbeat U.S. economic news.

The Dow closed at 7,977.92, up 216.32 points. The Standard & Poor’s 500 closed up 23.21 points, at 834.29, and the NASDAQ closed at 1,602.63, up 51.03 points.

The Commerce Department reported a large increase in February factory orders, following better-than-anticipated reports Wednesday on pending home sales and manufacturing.

In addition, banks stocks benefited from a decision Thursday by the Financial Accounting Standards Board to relax rules that make banks value assets at existing prices, analysts said.

The Dow was over 8,000 until the final hours of trading and has not broken that mark since early February.

The three-day rally came as world leaders closed their G-20 economic summit in London, vowing a two-fold plan to stimulate worldwide economic growth by contributing more than $2 trillion and tightening regulations in financial markets, including more oversight on freewheeling hedge funds. Roughly $500 billion will go to the International Monetary Fund. The leaders also vowed to crack down on tax havens. Analysts say reports this week suggest the U.S economy might have touched bottom and is headed for a recovery.

However, they are concerned about a report due Friday that is expected to show 654,000 nonfarm jobs lost in March.

The rally Thursday continued despite dismal labor reports on two consecutive days.

A Labor Department report Thursday morning stated initial claims for unemployment insurance increased to a seasonally adjusted 669,000 — 12,000 more than the previous week’s revised figures. The number exceeded analysts expectations and is the highest in more than 26 years. In addition, the number of laid-off workers filing claims for more than a week increased by 161,000, to 5.73 million — a 10th straight record high, the report also stated.

On Wednesday, an Automatic Data Processing Inc. report stated that private-sector employment decreased by 742,000 in March. The same day, a National Association of Realtors report said that pending home sales rebounded in February from a record low. And the Institute for Supply Management reported U.S. manufacturing activity shrank by less than anticipated. The numbers in the last two reports were better than anticipated.

The gains Thursday, two days into the quarter, followed a surge by stock futures earlier in the day. Dow futures rose 119, to 7,837. The S&P’s 500 index futures rose 13.70, to 822.90. NASDAQ 100-index futures rose 21.25, to 1,272.25.

The Dow is up 18.6 percent since a nearly 12-year low March 9. Still, stocks remain below their record highs in October 2007.

Also on Thursday, the European Central Bank cut its benchmark overnight rate to 1.25 percent from 1.5 percent. Many analysts had expected the bank to cut its rate to 1 percent. The bank also lowered its deposit rate and cut its marginal lending rate in an effort to spur spending.

Brian Lipps, a Charles Schwab vice president, said the standards board’s decision helped because “financial stocks have been leading the market recovery.”

“But in a broader sense, this series of economic numbers have been positive — not good, but certainly improving,” he said.

Wells Fargo & Co. and Goldman Sachs Group Inc. were among the top performers Thursday. Wells Fargo stock increased by 58 cents, to $15.06 a share. Goldman Sachs Group Inc. stock closed at $114.10, up $3.81 a share.

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