Stocks climb on signs of improvement in domestic economy; initial jobless claims fall

Stocks rise after economic reports notch gains

NEW YORK — Stocks are edging higher Thursday after reports indicated that the economy is extending its modest recovery.

Business at the nation’s service companies grew and factory orders rose in April. But the numbers fell short of economists’ expectations, as did figures on jobs and productivity released before the start of trading.

Meanwhile, retailers reported mixed sales for May, a sign that consumers remain cautious.

The rush of economic news brought investors’ attention back to the U.S. after their focus for the past month had been on Europe’s debt situation and political issues around the world.

The modest moves in stocks follow a gain of 225 points in the Dow Jones industrial average on Wednesday. It was the second straight day traders made big moves in the waning moments of trading. On Tuesday there was a steep sell-off just before the close.

“Most of the data points to an economy moving forward,” said James Meyer, chief investment officer at Tower Bridge Advisors in Conshohocken, Pa. “Some of the data shows the economy moving forward a little more slowly than either people would like or compared to the last month or so.”

In late morning trading, the Dow rose 1.28, or less than 0.1 percent, to 10,250.82. The Standard & Poor’s 500 index rose 1.45, or 0.1 percent, to 1,099.83, while the Nasdaq composite index rose 9.99, or 0.4 percent, to 2,291.06.

Three stocks rose for every two that fell on the New York Stock Exchange where volume came to 405 million shares compared with 425 million traded at the same point Wednesday.

Fewer workers were laid off last week. The Labor Department said initial jobless claims fell by 10,000 to 453,000 last week. The drop coincided with a report from payroll company ADP that said private employers added 55,000 jobs in May.

Both reports fell just short of economists’ forecasts, but still showed some improvement in the job market.

On Friday, the Labor Department will release its monthly report on the labor market, the most closely watched item on the economic calendar. ADP’s report often provides clues about how the job market is doing, but the government report provides a wider view since it also includes public sector employment.

Economists expect that 513,000 jobs were added in May, compared with 290,000 added a month earlier. It would be the biggest jump in 26 years, but as many as 300,000 of the workers hired in May are expected to be temporary positions to help conduct the U.S. census.

The Institute for Supply Management’s report on the service sector provides some hope that more jobs will be added in the coming months. The ISM’s index remained steady at 55.4 last month. Any reading above 50 indicates growth in the sector.

The report is considered a key gauge for the health of the jobs market because the service sector accounts for 80 percent of all workers outside of farmers.

While service industries recover slowly, manufacturing continues to show some of the most consistent growth coming out of the recession. The Commerce Department said factory orders rose by 1.2 percent in April, short of the 1.8 percent forecast by economists polled by Thomson Reuters. The slowdown was not a big surprise because orders jumped in March by their highest levels in six years.

There is some fear that manufacturing could face a slowdown because of the rising dollar and a potential slowdown in Europe’s economy. A stronger dollar makes it more expensive to sell U.S.-produced goods overseas. Also, demand could drop in Europe where countries like Greece, Spain and Portugal are wrestling with mounting debt.

The euro remained above a four-year low it hit on Tuesday. The euro, which has become an indicator for confidence in Europe’s economy, was little changed around $1.2192. It has been trading in a tight range throughout the day.

With investors moving into riskier assets, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.38 percent from 3.35 percent late Wednesday.

Crude oil rose 32 cents to $73.18 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 3.78, or 0.6 percent, to 664.30.

Overseas, Britain’s FTSE 100 gained 1.4 percent, Germany’s DAX index rose 1.6 percent, and France’s CAC-40 climbed 1.6 percent. Japan’s Nikkei stock average rose 3.2 percent.