Reports on jobless claims and the trade deficit Thursday boosted optimism about an economic recovery
By Mary Childs and Elizabeth Stanton
Dec. 10 (Bloomberg) -- U.S. stocks rose for a second day as the average number of Americans filing first-time jobless claims over the past four weeks fell to a one-year low and the trade deficit unexpectedly shrank as a weaker dollar boosted exports.
Oracle Corp. (ORCL) gained 2.9 percent after Goldman Sachs Group Inc. increased earnings estimates. Coca-Cola Co. (KO) climbed to a 18-month high as Costco Wholesale Corp. said it will resume stocking its products. Walt Disney Co. (DIS) rallied 3.1 percent to the highers price since September 2008 after Sanford C. Bernstein increased its share buyback estimate for fiscal 2010.
"It's pretty clear the economy continues to strengthen," said Michael Vogelzang, who helps manage $1.8 billion in assets as chief investment officer at Boston Advisors in Boston. "We continue to burn off the remaining pieces of the economic meltdown we had a year ago."
The Standard & Poor's 500 Index climbed 0.6 percent to 1,102.35 at 4:06 p.m. in New York. The Dow Jones Industrial Average increased 68.78 points, or 0.7 percent, to 10,405.83. The Nasdaq Composite Index added 0.3 percent to 2,190.86.
After surging as much as 64 percent from a 12-year low on March 9, the S&P 500 has been little changed since mid-October amid concern the economy's recovery from the worst recession in seven decades won't be sustained. The index is trading for about 22 times the reported operating earnings of its companies, near the highest level since 2002.
FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) are among companies benefiting from growing sales as slump in the dollar since March propels overseas business. Domestic sales for most companies in the S&P 500 fell during the third quarter as U.S. unemployment topped 10 percent for the first time since 1983. New jobless claims increased in the week ended Dec. 5 to 474,000 after declining for five straight weeks.
The four-week moving average of initial jobless claims slid to 473,750 last week and the trade gap narrowed 7.6 percent to $32.9 billion in October.
Companies that rely on discretionary consumer spending climbed 1.4 percent for the top gain among 10 S&P 500 industry groups.
Oracle rose 2.9 percent to $22.59 and contributed most to the S&P 500's advance. Sarah Friar, an analyst at Goldman Sachs, said in a report that the world's second-largest software maker is likely to give "more upbeat guidance" when it reports fiscal second-quarter results on Dec. 17.
Coca-Cola added 1.3 percent to $58.58, its highest close since May 27, 2008. Drinks made by the Atlanta- based company will return to the shelves of Costco, the world's largest U.S. warehouse club, after the companies resolved a pricing dispute.
Disney added 3.1 percent to $31.30 for the second-biggest advance in the Dow average. Michael Nathanson, an analyst at Sanford C. Bernstein, increased his estimate for share buybacks in fiscal 2010 by the world's biggest theme-park operator to 58.5 million shares. Nathanson also raised his 2009 and 2010 per-share earnings estimates and price forecast.
Pall Corp. (PLL) rose 8.6 percent to $34.08 for the biggest gain in the S&P 500 and the stock's steepest rally in almost a year. The maker of filters for refineries and drugmakers said that, excluding some items, it expects to earn at least $2.02 a share in the current fiscal year. That topped the average analyst estimate of $1.91 from a Bloomberg survey.
To contact the reporter on this story: Elizabeth Stanton in New York at firstname.lastname@example.org.