Stocks resume rally following strong earnings globally, fall in unemployment benefits claims

Stocks up on earnings, drop in unemployment claims

NEW YORK — Stocks rose Thursday after upbeat earnings reports and a modest drop in claims for unemployment benefits renewed some optimism about the economy.

The Dow Jones industrial average rose 50 points in morning trading. Stocks have rallied over the past week because of earnings that were generally better than expected. And companies raised their forecasts for this year, which has also eased the market’s concerns about the economy.

Southwest Airlines Co., ExxonMobil Corp., Avon Products Inc. and Sony Corp. topped earnings forecasts.

A drop in laid-off workers’ initial claims for unemployment benefits also raised hopes about the recovery. Though the Labor Department said claims fell only modestly, any decline is encouraging. The drop was slightly more than economists had forecast.

The Labor Department said new claims for unemployment benefits fell to 457,000 last week. That’s slightly better than the 459,000 forecast by economists polled by Thomson Reuters.

Economic reports the past few months have pointed to a slowdown in growth despite companies’ optimistic outlooks. The Federal Reserve said Wednesday in its assessment of the economy known as the “beige book” that the recovery is weakening in some parts of the country. The Fed’s report helped send stocks lower and ended a four-day winning streak for the Dow. That four-day rally had come largely on strong earnings reports.

In early morning trading, the Dow rose 51.54, or 0.5 percent, to 10,548.97. The Standard & Poor’s 500 index rose 4.87, or 0.4 percent, to 1,111.00, while the Nasdaq composite index rose 5.25, or 0.2 percent, to 2,269.81.

About five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 135 million shares.

Bond prices fell slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.03 percent from 2.99 percent late Wednesday.

Southwest reported earnings that beat analyst forecasts. The company reported heavy traffic to start the summer travel season. ExxonMobil’s earnings rose as a result of higher oil prices. Beauty products seller cited sales in Europe and Latin America for its higher income.

Japanese electronics maker Sony also reported strong earnings because of a jump in sales of televisions and PlayStation 3 gaming consoles.

Southwest shares jumped 18 cents to $12.19. ExxonMobil rose 80 cents to $61.71, while Avon Products rose $1.65, or 5.6 percent, to $31.18. Sony shares trading in the U.S. jumped $1.99, or 6.7 percent, to $31.55.

Colgate-Palmolive’s earnings beat forecasts, but revenue fell short of expectations. It also said it would take a bigger charge than previously expected because of Venezuela’s devaluation of its currency. When currencies in other countries fall, overseas profits for U.S. companies also come in lower when they’re translated into dollars.

The consumer products maker’s stock fell $4.61, or 5.5 percent, to $79.25.

Strong earnings and outlooks helped stocks overseas. European indexes all jumped following strong earnings from pharmaceuticals company AstraZeneca PLC, drug and materials company Bayer AG and telecommunications companies BT PLC and France Telecom SA.

Moody’s Investors Service said ratings on banks in Europe would not be affected following tests by regulators on the continent to determine whether banks would survive a further economic slowdown. Only seven of 91 banks failed the test, which reassured investors that the financial industry in Europe is stronger than previously thought.

The euro rose to $1.3096, its highest level since early May.

Britain’s FTSE 100 rose 1 percent, Germany’s DAX index rose 0.9 percent, and France’s CAC-40 gained 1.3 percent. Japan’s Nikkei stock average fell 0.6 percent.