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At midafternoon, all three major U.S. indexes were up. It was the fifth straight day of gains for the Standard & Poor’s 500, a record not matched since early March.
Market watchers were quick to point out that the engines driving the stock market gains were more tenuous than turbocharged. The drop in weekly unemployment claims follows a month in which U.S. job creation dropped off a cliff. The S&P’s five-day winning streak is coming in just under the wire: Wednesday’s gain was an unimpressive 0.01 point. And in the middle of the first-quarter earnings season, though most companies have beat analysts’ expectations on profit, most are missing on revenue.
Scott Freeze, president of Street One Financial in Huntingdon Valley, Pa., thought Thursday’s rise had more to do with investors believing that the world’s central banks will continue with their policies of easy money, rather than any notable change in how people viewed the economy.
The market, he said, is “slowly melting up on basically nothing.”
“Some of the earnings were OK, but it’s more just stimulus, stimulus, stimulus,” Mr. Freeze said. “As long as the world wants to print (money) … the fears of a global slowdown are going to be muted.”
“You can leave it in cash and make nothing on it,” Mr. Heider said. “You can put it in bonds and earn nothing.”
Mr. Heider said he thought the latest report on jobless claims was consistent with an economy that was improving, but only incrementally. Weekly applications for unemployment benefits fell 16,000 to 339,000, the second-lowest level in more than five years, according to the Labor Department.
The job market has suffered some recent setbacks. In March, employers added only 88,000 jobs, down from an average of 220,000 for the previous four months. The unemployment rate fell to 7.6 percent from 7.7 percent, but only because more people stopped looking for jobs.
At midafternoon, the Dow Jones industrial average was up 80 points to 14,757, a gain of 0.6 percent. The Standard & Poor’s 500 was up 12 at 1,591, or 0.8 percent. The Nasdaq composite index was up 29 to 3,298, or 0.9 percent.
Thursday’s earnings offered a mixed view of the economy and mixed reactions from investors. Many companies have been reporting better first-quarter results, but not necessarily because of stronger economic conditions.
So far this season, 71 percent of S&P 500 companies have beat analysts’ profit expectations, according to John Butters, senior earnings analyst at FactSet. But that has come more from cost-cutting than from business going gangbusters: Fifty-six percent of the S&P 500 companies have missed estimates for revenue. The effect on the stock prices has been unpredictable.
Dow Chemical, which reported results Thursday, was one example. The company managed to increase profits even as revenue slipped because it cut costs and paid down debt. The stock was up 6 percent at $34.10.
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