Stocks set to extend 2-day rally after better-than-expected report on jobless claims

Stock futures rise after jobless claims report

NEW YORK — Stocks are set to extend a rally into a third day as investors welcomed a report that first-time jobless claims fell more than expected last week.

Mixed reports Thursday from retailers on June sales results have helped boost some individual stocks, but did not widely affect the market.

The Labor Department said initial jobless claims fell to their lowest levels since early May. Initial claims fell to a seasonally adjusted 454,000 last week, better than the 465,000 economists polled by Thomson Reuters had forecast.

The drop in claims, at least temporarily, reverses a trend of disappointing jobs reports that had sent stocks lower in recent weeks. Before a stock surge over the past two days, investors had regularly sold off stocks in recent weeks because of economic reports that showed the economy is growing, but not as fast as had been predicted.

Continued high unemployment has dragged down consumer confidence, which in turn has slowed spending. Consumer spending accounts for the bulk of economic activity. Without a rebound in jobs and sales, the economy is likely to continue to post only modest growth.

Reports from retailers indicated June sales were mixed. Limited Brands Inc., which owns Victoria’s Secret and Bath & Body Works, reported sales that topped expectations. Many teen retailers saw a drop in sales last month, including Hot Topic Inc. and The Wet Seal Inc.

Ahead of the opening bell, Dow Jones industrial average futures rose 43, or 0.4 percent, to 10,023. Standard & Poor’s 500 index futures rose 5.20, or 0.5 percent, to 1,064.50, while Nasdaq 100 index futures jumped 7.00, or 0.4 percent, to 1,796.50.

The Dow jumped back above 10,000 Wednesday after soaring 275 points. It was the second straight day of gains and the first back-to-back advance since the middle of June. Traders say the recent gains, which came after seven straight days of declines, were not tied to any one particular catalyst. Instead some investors jumped into the market thinking prices had been beaten down too much in the past couple of weeks.

Interest rates rose in the Treasury market Thursday as investors sold bonds after the upbeat jobs report. Rates usually rise when there are signs the economy is improving because a stronger economy leads to inflation.

The yield on the 10-year Treasury note, which moves opposite its price, rose back above 3 percent to 3.02 percent from 2.99 percent late Wednesday. Its yield is used as a benchmark for many consumer loans and mortgages.

Overseas markets rallied after the International Monetary Fund raised its world growth estimate for the year to 4.6 percent from 4.2 percent. The climb also comes as the European Central Bank wrapped up a meeting where it kept a key interest rate unchanged. The head of the bank is also expected to discuss the strength of the banking sector in Europe. Big banks in Europe are undergoing stress tests to determine if they can handle a further economic slowdown and rising sovereign debt problems throughout the continent.

The euro rose to $1.2677, its highest level since May. The common currency used by 16 European countries has been battered in recent months by worries that the continent’s economy would grind to a halt because of mounting sovereign debt in countries like Greece, Spain and Portugal.

Britain’s FTSE 100 rose 1.6 percent, Germany’s DAX index rose 0.6 percent, and France’s CAC-40 gained 1.7 percent. Japan’s Nikkei stock average jumped 2.8 percent.