NEW YORK (AP) — Optimism that a budget deal will be reached in Washington helped lift the stock market in early Thursday trading. A pair of economic reports also brightened the mood.
The Dow Jones industrial average was up 50 points to 13,035 at 2:45 p.m. EST.
The Dow took a brief turn lower after House Speaker John A. Boehner said little progress was being made in budget talks in Washington. The Dow was up as much as 77 points in morning trading, turned negative as Mr. Boehner made his remarks at 11:30 a.m., then moved higher throughout the afternoon.
The strong start followed several positive economic reports, including a higher estimate of third-quarter U.S. economic growth, an increase in home sales and a drop in claims for unemployment benefits.
Following a meeting with Treasury Secretary Timothy F. Geithner, Mr. Boehner told reporters that Democrats still haven’t said which cuts they would accept to government benefit programs, suggesting a final budget deal remains a long way off. Republicans have said that they are open to increasing tax revenues as part of an agreement but only if they’re accompanied by significant cuts to spending.
Investors have been closely watching the talks between the White House and Congress over the “fiscal cliff” — sharp government spending cuts and tax increases scheduled to start Jan. 1. New developments in the talks have whipsawed the market.
“It’s a headline-watching market with this fiscal cliff,” said David Brown, chief market strategist of the investment research firm Sabrient Systems.
Mr. Brown said the ongoing negotiations are likely to cause the stock market to take sudden turns in the weeks ahead. “But things seem to be moving in the right direction,” he said. “I don’t think either party wants to get pinned with hurting the market or the economy.”
In other trading Thursday, the Standard & Poor’s 500 rose seven points to 1,417, and the Nasdaq gained 19 points to 3,011.
The Commerce Department raised its estimate for U.S. economic growth to an annual rate of 2.7 percent in the July-through-September period. That figure is much better than the 2 percent rate estimated a month ago and more than twice the 1.3 percent rate logged in the three previous months.
The Labor Department also reported that the number of Americans applying for unemployment benefits dropped to 393,000 last week, in line with what economists had expected. It was the second straight drop after superstorm Sandy drove applications higher earlier this month.
Some retail stores posted poor sales numbers, driving their stocks lower. It’s a crucial time for retailers, who log a huge chunk of their yearly profits in the weeks running up to the holidays.
Kohl’s plunged $5.21, or 10 percent, to $45.94, the most in the S&P 500 index. The company posted a drop in sales and said stores in the Mid-Atlantic and the Northeast, areas hit by Sandy, fared the worst. Kohl’s stock lost $5.21 to $45.94.
Results at Target, the Gap, and others also fell short of Wall Street expectations.
Kroger Co. rose $1.20 to $26.25 after the supermarket chain reported stronger quarterly profits and raised its earnings outlook for the year. Stronger sales helped the operator of Fred Meyer and Food 4 Less stores post better results than analysts had expected.