Stocks jump on last day of quarter after upbeat reports on unemployment claims, GDP

Stocks set to end September surge with more gains

NEW YORK — Stocks are ending a strong September with more gains Thursday after new reports on unemployment claims, economic growth and manufacturing topped expectations.

Major indexes have been surging all month on signs of incremental improvement in the economy, which have allayed worries that the country would fall back into recession.

The Dow Jones industrial average rose nearly 35 points in late morning trading. It has risen 8.5 percent this month, which puts it in line for its best September performance since 1939.

Traders were upbeat after a reading on regional manufacturing in the Chicago area jumped in September. Economists had expected the Chicago Purchasing Managers Index to fall slightly. That regional manufacturing report bodes well heading into Friday’s monthly report on national manufacturing activity from the Institute for Supply Management.

“The jump in Chicago PMI was nothing short of shocking,” said Nick Kalivas, vice president of financial research at MF Global. “It was complemented by the drop in (unemployment) claims.”

The Labor Department said Thursday that first-time claims for unemployment benefits fell more than economists had predicted last week. Applications are still at levels that indicate employers aren’t necessarily ramping up hiring, but at least the pace of firings seems to be slowing.

The government also slightly raised its estimate on second-quarter gross domestic product, the broadest measure of the nation’s economic activity. The government said GDP grew at 1.7 percent pace in the second quarter, better than the 1.6 percent pace estimated a month ago.

U.S. economic growth isn’t expected to pick up much because consumers have cut back on spending while unemployment remains high. Businesses have kept activity in check because of uncertainty surrounding potential tax changes and costs associated with recently passed health care and financial regulatory reforms.

In corporate news, American International Group Inc. reached a deal to repay billions of dollars it received from the government during the credit crisis. AIG was the largest recipient of bailout money during the financial crisis that peaked in 2008.

The Dow jumped 34.13, or 0.3 percent, to 10,869.26 late in morning trading.

The Standard & Poor’s 500 index rose 4.22, or 0.4 percent, to 1,148.95, while the Nasdaq composite rose 5.01, of 0.2 percent, to 2,381.57.

Bond prices fell, driving interest rates higher, after the upbeat economic reports dampened demand for defensive investments like bonds. The yield on the 10-year Treasury note, which is used to set interest rates on many kinds of consumer and corporate loans, rose to 2.55 percent from 2.50 percent late Wednesday.

Most European markets erased their losses after the economic reports in the U.S. They had been lower earlier in the day after Spain’s credit rating was cut and Ireland announced plans for a sweeping bank bailout program.

Britain’s FTSE 100 rose 1 percent, Germany’s DAX index gained 0.8 percent, and France’s CAC-40 rose 0.7 percent.

AIG shares rose $1.99, or 5.3 percent, to $39.44. Prudential shares fell $2.46, or 4.4 percent, to $54.07.

About two stocks rose for every one that fell on the New York Stock Exchange where volume came to 291.4 million shares.