Stocks edged higher in early trading Thursday after a pair of reports provided more evidence that the U.S. is maintaining a slow but steady economic recovery.
The number of Americans seeking unemployment benefits dropped last week and is near the lowest level since June 2008, the Labor Department said Thursday. Weekly applications are just 1,000 above a five-year low reached last month.
Also, a survey from the payroll company ADP showed that American businesses added 176,000 jobs in August, fewer than in June and July but roughly in line with the monthly average for the year.
The encouraging reports came one day before the government releases its closely watched jobs report for August.
The Dow Jones industrial average rose 49 points, or 0.3 percent, to 14,975 in the first half-hour of trading. The Standard & Poor’s 500 index rose five points, or 0.3 percent, to 1,658. The Nasdaq composite gained seven points, or 0.3 percent, to 3,658.
Costco rose $2.90, or 3 percent, to $114.40 after the discount store chain said revenue at stores open at least a year rose 4 percent in August, slightly faster than Wall Street’s expectations. Walgreen’s also gained after reporting a strong rise in sales last month. Walgreen’s rose 98 cents, or 2 percent, to $50.47 after reporting a 4.8 percent increase in sales.
In government bond trading, the yield on the 10-year Treasury note climbed to 2.96 percent from 2.90 percent. The yield has risen 1.3 percentage points in four months as bond traders anticipate that the Federal Reserve will cut back on its economic stimulus.
Rising yields on Treasury notes matter for the economy because they dictate the direction of mortgage rates and other key interest rates. It appears, however, that investors are getting more comfortable with higher borrowing costs.
“We don’t anticipate that a gradual rise in rates will choke off the economy,” said Dave Roda, regional chief investment officer for Wells Fargo Private Bank. “We are still looking at very low rates historically.”
In commodities trading, the price of oil rose 11 cents, or 0.1 percent, to $107.36 a barrel. Gold was little changed at $1,380 an ounce.
Courtesy of Los Angeles Times