US stocks head for first up day in over a week
NEW YORK — A little bit of good news was all it took to break a weeklong slump in the stock market.
A report that U.S. exports hit a record in April sent stocks sharply higher Thursday as investors concluded that the recovery may not be as sluggish as the last week of grim economic reports have suggested.
The Dow Jones industrial average rose 126 points, or 1 percent, to 12,175 in afternoon trading. The Standard & Poor's 500 index rose 13, or 1 percent, to 1,292. The Nasdaq composite rose 14, or 0.5 percent, to 2,689.
Stock indexes have fallen for six straight days on a string of poor reports on manufacturing, home sales, hiring and consumer confidence. It's the longest losing streak for The Dow Jones industrial average in over a year. The Standard & Poor's 500 index fell for the longest period since February 2009.
The increase in U.S. exports narrowed the trade deficit and raised expectations that the economy might be growing at a slightly faster pace than economists had estimated.
The narrower trade deficit is a sign that U.S. manufacturers are becoming more competitive in overseas markets. U.S. companies sold more computers, heavy machinery and telecommunications equipment abroad in April compared with the month before. Imports declined because fewer cars were bought from Japan after factories there were damaged by that country's earthquake and tsunami disaster.
Trade levels factor into calculations of U.S. economic growth. Thursday's number could add half a percentage point or more to the government's estimate of second-quarter gross domestic product, said Anthony Chan, chief economist for JPMorgan Private Wealth.
The market's weeklong slump also made stocks appear relatively cheap, Chan said. The S&P 500 lost 6.2 percent over the previous six days of trading leading up to Thursday.
"Markets usually swing like a pendulum," Chan said. "This decline has been strong enough that you can easily justify the market taking a breath."
Companies that make farming machinery rose after the government reported that U.S. corn crops would be smaller this fall. That sent corn prices soaring and raised expectations that farm owners would be buying more agricultural equipment such as tractors. Deere & Co. shot up 3 percent and AGCO Corp rose 2 percent.
A report on claims for unemployment benefits was in line with expectations that new applications would stay roughly the same. The Labor Department reported that new claims edged up 1,000 to 427,000. Economists had expected a slight drop. The high level of claims still suggests that the job market is slow.
Advertising company Interpublic Group of Cos. Jumped 7 percent, the most of any company in the S&P 500 index, after ratings agency Moody's upgraded its rating on the company.
Spiking oil prices sent energy stocks higher. Energy companies in the S&P 500 index rose 1.5 percent. Crude rose $1.55 to $102.30.
Stocks have been slipping since mid-April as investors become concerned that the U.S. economy has hit a soft patch. Rising oil prices, Japan's tsunami and nuclear disaster and the risk that Greece might default on its debt have led investors to lower their forecasts for U.S. growth this year.