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Stocks jump as jobs, productivity data boost mood

November 06, 2009|Associated Press

NEW YORK — Stocks shot up Thursday, with the Dow industrials gaining more than 200 points to retake the 10,000-point threshold, as several pieces of upbeat news boosted optimism about the economic recovery.

The rally, which continued a streak of volatility that began last month, followed a wave of positive developments:

* Cisco Systems forecast better-than-expected revenue growth in the current quarter after four straight quarters of revenue declines. John Chambers, chief executive of the networking-equipment giant, said the company was seeing a global economic recovery and would resume hiring.

* The government said the number of newly laid-off workers seeking unemployment benefits fell to 512,000 last week, the lowest level since January and fewer than economists had forecast.

* Worker productivity jumped by the most in six years, rising 9.5% in the third quarter. The government report illustrates the continuing low level of employment in the country but also the potential for rising corporate profits.

* Major retailers posted October sales gains averaging 1.8% from a year earlier, marking the second consecutive year-over-year increase after a year of sliding.

The reports gave investors a shot of optimism about the government's closely followed monthly report on employment today. Economists estimate on average that the jobless rate edged up to 9.9% last month.

Quincy Krosby, market strategist at Prudential Financial, said many investors would be looking at the average number of weekly hours worked and demand for temporary workers. That's because as the economy improves, businesses will first ask employees to stay at work longer and will bring in more temps before gaining enough confidence to hire.

In September, the number of weekly hours worked stood at a record low of 33, while the number of temporary workers fell by 2,000.

Improvements in these yardsticks would "give legitimacy to the notion that the economy is picking up," Krosby said.

On Thursday the Dow rose 203.82 points, or 2.1%, to 10,005.96, its first close above 10,000 since Oct. 22, and 86 points below its high of the year. It was the sixth time this year that all 30 stocks in the index rose, and it was the biggest advance since a gain of 257 points on July 15, when computer chip maker Intel said business was improving.

The broader Standard & Poor's 500 index surged 20.13 points, or 1.9%, to 1,066.63, its fourth straight gain.

The tech-dominated Nasdaq composite index, benefiting from Cisco's outlook, jumped 49.80 points, or 2.4%, to 2,105.32, its biggest gain since a 2.5% spike on July 23.

The Russell 2,000 index of smaller companies soared 3.2%.

Five stocks rose for every one that fell on the New York Stock Exchange.

In other market highlights:

* The Treasury bond market moved little. The yield on the benchmark 10-year T-note slipped to 3.53% from 3.54% late Wednesday.

* An index of the dollar's value against other major currencies edged up 0.1%. Gold prices rose.

* Crude oil futures fell 78 cents to settle at $79.62 per barrel on the New York Mercantile Exchange.

* European stocks recovered from early losses to end higher after central banks left interest rates unchanged. Key stock indexes rose 0.4% in Britain, 0.7% in Germany and 1.1% in France. Japanese shares fell 1.3%.

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