Stocks rally on labor market data, earnings
NEW YORK — Stocks posted their best day of the year on Thursday after a drop in applications for unemployment insurance boosted confidence in the economy and Disney’s results overshot expectations.
The rally came ahead of the widely-followed payrolls report for January due Friday, which some are expecting to be affected by the extreme weather that hit much of the United States. December’s number was a much-lower-than-expected 74,000 and an upward revision wouldn’t be a surprise.
Initial claims for state unemployment benefits declined 20,000 last week to a seasonally adjusted 331,000. While the data has no direct bearing on January’s employment report it bodes well for the jobs market and the overall economy.
“Investors recently have been choosing to look at the glass half empty data and not focus on the positives,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
“Bad weather causes cancellations, flight problems, business closings. I’m hoping we get an upward revision to the December (payrolls) number tomorrow, but if we get a lousy number I’m not going to crawl under a rock.”
Recent soft data added to jitters about growth in China and a selloff in emerging market currencies and stocks. But a near 6 percent decline on the S&P 500 from its record high last month to the session low Wednesday was seen by some as a buying opportunity, as earnings keep growing.
Walt Disney was the most recent bellwether to beat expectations as its profit topped estimates, sending its shares up 5.3 percent to $75.56. Disney led gains on both the Dow industrials and S&P 500.
The Dow Jones industrial average rose 188.3 points or 1.22 percent, to 15,628.53, the S&P 500 gained 21.79 points or 1.24 percent, to 1,773.43 and the Nasdaq Composite added 45.57 points or 1.14 percent, to 4,057.122.
It was the largest daily percentage gain for the S&P 500 and Dow since mid-December.