- Associated Press - Thursday, May 30, 2013

NEW YORK (AP) — The stock market rose Thursday after a pair of lackluster economic reports convinced traders that the U.S. central bank will continue to boost the economy with its stimulus program.

The number of Americans filing for unemployment benefits rose, and an initial estimate of first-quarter economic growth was revised slightly lower. That situation suggests that the U.S. economy still may need some time to recover from its funk and that the Fed will keep up its $85 billion in monthly bond purchases.

“The big worry that’s been hitting the market lately, that the Fed might step back prematurely, might be fading a little today on the idea that the economy does need a bit more support,” Jeff Kleintop, chief market strategist at LPL Financial, said.


SEE ALSO: Applications for unemployment aid rise to 354,000


The rise in the Standard & Poor’s 500 index was led by banking and insurance stocks, which gained 1.4 percent. Among individual bank stocks, Bank of America rose 39 cents, or 2.9 percent, to $13.87. The stock is trading at its highest in more than two years. JPMorgan gained $1, or 1.9 percent, to $54.58.

Banks and other stocks that stand to benefit the most from an improving economy have surged this week, a change from earlier in the year, when investors favored dividend-rich stocks such as phone companies. Now investors are selling dividend-rich stocks and buying so-called growth stocks. The S&P’s financial index is up 2.5 percent this week, and its telecommunications index is down 5.8 percent.

The stock market also got a boost from deal news.


SEE ALSO: U.S. economy grew at modest 2.4 percent rate in 1st quarter


NV Energy surged $4.34, or 23 percent, to $23.62, leading a broad advance in utility companies. Northeast Utilities rose 45 cents, or 1 percent, $42.17. Wisconsin Energy climbed 45 cents, or 1.1 percent, to $41.45.

Clearwire, a wireless network operator, surged 86 cents, or 24 percent, to $4.35 after satellite TV operator Dish Network raised its bid for the company to $6.9 billion.

In economic news, the number of Americans seeking unemployment aid rose last week, a sign layoffs have increased, the Labor Department said Thursday. Claims for unemployment aid rose 10,000 last week to 354,000. The government also lowered its estimate for U.S. economic growth in the first three months of the year to 2.4 percent from 2.5 percent.

Trading has been choppy on Wall Street this week as investors wrestle with the question of whether the Fed will ease its economic stimulus. Minutes released last week from the Fed’s last policy meeting showed that some central bank officials favored slowing the purchases as early as next month, if the economy improves enough. The program has been a major factor supporting a rally in stocks by encouraging investors to buy riskier assets.

The Dow Jones industrial average rose 106 points Tuesday, then fell by the same amount Wednesday, leading some market watchers to ask whether the rally that has pushed the Dow and S&P 500 index to record levels may be fizzling out.

While the prospect of a change in Fed strategy is unsettling investors, ultimately they should welcome the end of the Fed’s stimulus because it means that the economy is strong enough to stand on its own two feet, JJ Kinahan, chief derivatives strategist at TD Ameritrade, said.

“It’s the vote of confidence,” Mr. Kinahan said. “It should mean that the overall economy is healthy.”

The Dow was up 86.31 points, or 0.6 percent, to 15,390 points as of 2:34 p.m. EDT. The S&P 500 index climbed 12 points, or 0.7 percent, to 1,660. The Nasdaq composite index rose 33 points, or 1 percent, to 3,500.

Stock investors have had a good year so far. The Dow is 17.3 percent higher and has set record closing highs on nine days in May. The S&P 500 index is up 16.2 percent and is on track to rise for a seventh straight month — its longest winning streak since 2009.

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