Stocks surge over 10,000 on jobs data

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By Tim Paradis ASSOCIATED PRESS

NEW YORK | A drop in unemployment claims and an upbeat forecast from Cisco Systems Inc. gave investors a jolt of confidence a day before a key government report on jobs.

The Dow Jones Industrial Average jumped more than 200 points Thursday to its first close above 10,000 in two weeks, while the Nasdaq composite index led major indexes with a gain of 2.4 percent after Cisco, the maker of computer-networking gear, predicted its revenue would grow.

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 economists had forecast. Initial claims are considered a gauge of the pace of layoffs.

The report unleashed a wave of optimism about the government's monthly report on employment Friday, which will shape trading because of the ties between joblessness and consumer spending. Economists say spending must increase for the economy to mount a sustained recovery.

Analysts project that the unemployment rate rose to 9.9 percent in October.

The biggest jump in productivity in six years drove hopes that lower costs will boost corporate profits. The report also illustrated, though, that many employers remain reluctant to hire.

The government said the amount of output per hour worked rose 9.5 percent in the July-September quarter.

According to preliminary calculations, the Dow rose 203.82, or 2.1 percent, to 10,005.96, its first close above 10,000 since Oct. 22. It was the Dow's biggest advance since a gain of 257 points on July 15, when computer chip maker Intel Corp. said business was improving.

The broader Standard & Poor's 500 index rose 20.13, or 1.9 percent, to 1,066.63, while the Nasdaq rose 49.80, or 2.4 percent, to 2,105.32. The Russell 2000 index of smaller companies rose 18.03, or 3.2 percent, to 581.15.

Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.3 billion shares compared with 1.4 billion Wednesday.

Bond prices were mixed. The benchmark 10-year Treasury note slipped but its yield remained flat at 3.53 percent from late Wednesday.

While the market often jumps at good news, investors can't shake fears that the economy won't be able to maintain the 3.5 percent pace of growth seen in the third quarter as government stimulus programs wind down.

Cisco pulled tech stocks higher after it 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 64 cents, or 2.8 percent, to $23.93.

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

Light, sweet crude fell 78 cents to settle at $79.62 per barrel on the New York Mercantile Exchange.