Stocks rise following drop in jobless claims

Stocks rose in light volume Wednesday following a drop in weekly unemployment claims to the lowest level of the year and a rise in new home sales. Trading volume was thin ahead of the Thanksgiving holiday. Light volume can exacerbate swings in the market. The Labor Department said new claims for unemployment insurance fell by 35,000 last week to 466,000. That's the fewest claims since the week ending Sept. 13, 2008, and far better than the 500,000 that economists had expected. The news suggest the job market is slowly healing, but concern remains the improvement will be temporary as the weak economy continues to push unemployment higher. The jobless rate hit 10.2 percent in October and many analysts believe it will keep rising to 10.5 percent or higher before starting to improve next summer. The Commerce Department said new home sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists surveyed by Thomson Reuters had expected a pace of 410,000. The Commerce Department, meanwhile, said consumer spending rose a brisk 0.7 percent last month, following a 0.6 percent drop in September. It was the best showing since a big 1.3 percent jump in August when the government's now-defunct Cash for Clunkers programs enticed people to buy cars. Not all the day's news was upbeat. The Commerce Department also said orders for expensive manufactured goods dropped 0.6 percent last month, following a 2 percent gain in September. It marked the first drop since August. Economists had expected orders would grow 0.5 percent. In midmorning trading, the Dow Jones industrial average rose 11.04, or 0.1 percent, to 10,444.75. The broader Standard & Poor's 500 index rose 1.72, or 0.2 percent, to 1,107.37, and the Nasdaq composite index rose 4.67, or 0.2 percent, to 2,173.85. The dollar fell against most other major currencies, while gold rose to another record. A weakening dollar has bolstered commodities and stocks of energy and materials companies, helping pump up their stocks in the market's eight-month rally. Bond prices fell slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.33 percent from 3.31 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.05 percent from 0.03 percent. Light, sweet crude fell 11 cents to $75.91 per barrel on the New York Mercantile Exchange. Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 179 million shares compared with 229.4 million shares traded at the same point Monday. Overseas, Japan's Nikkei stock average rose 0.4 percent. Britain's FTSE 100 rose 0.8 percent, Germany's DAX index rose 0.9 percent, and France's CAC-40 rose 1.1 percent.