Stocks soared on hopes of an earnings recovery – but it’s still too soon to cheer.
Upbeat profit reports by four giant companies – Microsoft, General Electric, Motorola and Yahoo! – triggered Wall Street’s strongest rally in blue chips and tech stocks in two months.
“Everyone is reaching and grasping at straws – and, happily, we had some with the earnings,” said Hugh Johnson, chief investment officer at First Albany.
“Even though it’s very premature to forecast a second-half recovery, we’re all doing it.
“It shows just how obsessed investors are about earnings, and how anxious they are to look for light at the end of the profits-recession tunnel.”
Investors began jumping back into stocks en masse despite a Labor Department report yesterday that initial jobless claims are at the highest level in nine years.
The Dow Jones industrial average jumped 237.97, or 2.32 percent, to 10,478.99. The Nasdaq climbed 103.70, or 5.26 percent, to 2,075.74. The Standard & Poor’s 500 index gained 27.96, or 2.37 percent, to 1,208.14.
Bonds also jumped due to the weaker employment outlook and a debt crisis in Argentina.
South Americans poured their cash into safer U.S. bonds and treasuries as the Argentine stock market slid 13 percent amid fears the government there may default on debts.
The Labor Department said the number of Americans receiving first-time unemployment benefits jumped sharply in the latest week, suggesting that an economic comeback could take longer than expected.
The Labor Department said initial jobless claims for the week ended July 7 soared 42,000 to 445,000, the highest level since July 25, 1992, when the jobless claims stood at 539,000 during the depths of the last recession.
The number of workers still collecting state unemployment checks rose to 3,046,000 for the week ended June 30, the highest level since Oct. 24, 1992, when claims hit 3,068,000, the Labor Department said.
Analysts said most investors found comfort in the first round of earnings in the latest quarter.