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US STOCKS-Wall St boosted by upbeat economic data

Published 09/09/2010, 12:18 PM
Updated 09/09/2010, 12:24 PM

* Initial jobless claims fall more than expected

* Financials, energy shares lead indexes higher

* Indexes up: Dow 0.7 pct; S&P 0.9 pct; Nasdaq 0.8 pct (Updates to midday, changes byline)

By Leah Schnurr

NEW YORK, Sept 9 (Reuters) - U.S. stocks rose on Thursday as better-than-expected jobs and trade gap data improved fragile investor optimism over the economic recovery.

Data showed new claims for unemployment insurance fell more than expected last week to their lowest level in two months, while the U.S. trade deficit narrowed sharply in July as exports shot to their highest level since August 2008.

Even so, some skepticism over the strength of the recovery kept gains in check as a Labor Department official said some states had been unable to submit claims data due to Monday's Labor Day holiday, resulting in the department making estimates for them.

Fears of a double-dip recession have kept investors at bay in recent months. But with data in the past week topping expectations, some have been caught off guard and brought back into the market.

"People have been basically liquidating stocks. They are underweight (equities) and people have been very fearful that September is historically one of the worst months of the year," said Nick Kalivas, senior equity index analyst at MF Global in Chicago.

"The economic numbers in the last week or so have been able to beat expectations, so that's providing some confidence that the third quarter will finish firm."

Financial stocks led gains, with Bank of America Corp up 3.4 percent to $13.82. The KBW bank index rose 2.7 percent. Energy shares were lifted after a rise in oil prices. Chevron rose 0.9 percent to $77.98.

The Dow Jones industrial average added 68.41 points, or 0.66 percent, to 10,455.42. The Standard & Poor's 500 Index gained 9.98 points, or 0.91 percent, to 1,108.85. The Nasdaq Composite Index rose 17.79 points, or 0.80 percent, to 2,246.66.

Indexes were on track to rack up their sixth day of gains in the last seven sessions in what was expected to be low volume as the Jewish New Year was celebrated. The six lowest volume days of the year have come in the last month.

The Dow average returned to positive territory for the year and the S&P 500 was at its highest in about a month.

But capping gains in the Dow, McDonald's Corp dropped 2.8 percent to $73.92 after its August sales in Europe were softer than expected.

Texas Instruments rose ahead of its midquarter update expected after the closing bell. Analysts will be looking for signs of how chip demand is holding up. Kalivas noted investors were reluctant to be short ahead of the announcement.

Texas Instruments was up 1.6 percent at $24.07.

(Editing by Kenneth Barry)

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