The number of Americans filing for jobless benefits for the first time surged unexpectedly to a seasonally adjusted 626,000 last week, the Labor Department reported Thursday - the highest level since October 1982.
A separate labor report showed productivity rose at an annual rate of 3.2 percent in the final three months of last year, far above the 1.1 percent rise that economists had expected, reflecting the massive wave of layoffs that occurred during the fourth quarter. The Commerce Department said factory orders fell by 3.9 percent in December, a record fifth straight drop. And retailers reported another month of slumping sales in January.
Yet the Dow Jones Industrial Average recovered early losses to end the day more than 106 points higher.
The Dow rose 106.41, or 1.34 percent, to 8,063.07. The Standard & Poor’s 500 Index rose 13.62, or 1.64 percent, to 845.85, while the Nasdaq Composite Index rose 31.19, or 2.06 percent, to 1,546.24.
The technology-laden Nasdaq led the major market indicators after Akamai Technologies Inc. said its fourth-quarter earnings rose a better-than-expected 13 percent as more customers signed up for its Internet traffic-management services.
“The economy at some point will recover and when it does, tech is a pretty interesting play,” Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto, told the Associated Press. “It will likely be one of the first movers.”
Akamai rose $2.56, or 18 percent, to $16.73.
Financial stocks also helped lift the market following speculation the government could funnel aid to regional banks. Bank stocks also rose on reports that Treasury Secretary Timothy Geithner and other top officials are nearing completion of a plan to overhaul the government’s $700 billion financial rescue program.
JPMorgan Chase & Co. rose 50 cents, or 2.1 percent, to $24.54, and PNC Financial Services Group Inc. rose $1, or 3.5 percent, to $29.83.
MasterCard Inc. jumped $19.69, or 14 percent, to $159.84 after its fourth-quarter earnings easily topped Wall Street’s expectations.
Retailers climbed higher even after issuing their gloomy sales reports. Wal-Mart rose $2.14, or 4.6 percent, to $48.56, while Macy’s rose 43 cents, or 5.2 percent, to $8.75. Target Corp. rose 95 cents, or 3 percent, to $32.29. Discount clothing retailer Ross Stores Inc. rose $2.38, or 8.4 percent, to $30.63.
Investors were still bracing for Friday’s January employment report from the Labor Department. The monthly reading is one of the most important economic indicators because rising unemployment cuts into how much consumers spend. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Some economists have warned that the jobless rate may hit the low double digits before the economy turns around.
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