Dow Average Rises to Record as Jobless Claims Decline

The Dow Jones Industrial Average climbed to another record as the number of Americans who filed for unemployment benefits fell to a six-week low, showing further improvement in the labor market.

Bank of America Corp. rallied 2.9 percent as financial stocks advanced. Boeing Co. jumped 2.5 percent, leading gains among the biggest U.S. companies. Ciena Corp. and JDS Uniphase Corp. surged at least 7.6 percent as Ciena posted earnings that topped estimates. PetSmart Inc. tumbled 6.6 percent as forecasts for earnings and sales growth missed projections.

The Standard & Poor’s 500 Index added 0.2 percent to 1,544.26, the highest since Oct. 31, 2007, at 4 p.m. in New York. The Dow rose 33.25 points, or 0.2 percent, to 14,329.49 today. More than 6.1 billion shares traded hands on U.S. exchanges today, or 2.9 percent below the three-month average.

“There’s an underlying element of support for the labor market and it’s really driven by housing and potentially construction finally coming back,” Robert Lutts, chief investment officer of Cabot Money Management in Boston, which manages $500 million, said in a telephone interview. “We’re starting to see some health in some of those dormant areas of the economy, so quantitative easing and lower interest rates are finally having an impact and the stock market is of course telling us that.”

First-time jobless claims unexpectedly fell to 340,000 last week, the lowest since the period ended Jan. 19, according to Labor Department data. The median forecast called for 355,000. The four-week average dropped to a five-year low. A separate Labor Department report tomorrow may show nonfarm payrolls rose by 165,000 last month, according to economists in a Bloomberg survey.

Trade Deficit

The trade deficit in the U.S. widened more than forecast in January as demand for imported crude oil rebounded. The gap grew to $44.4 billion from $38.1 billion in December, Commerce Department figures showed.

European Central Bank President Mario Draghi stuck to his view that the euro-area economy will gradually recover later this year. The ECB today predicted the 17-nation economy will shrink 0.4 percent this year, more than the 0.3 percent contraction forecast three months ago. The central bank lowered its 2014 inflation projection to 1.3 percent from 1.4 percent.

The 116-year-old Dow extended a record high yesterday as a private report showed companies hired more workers than estimated and the Federal Reserve said the economy is growing. The S&P 500 is just 1.4 percent below a record as the bull market enters its fifth year.

‘Bunker’ Market

The benchmark index has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Fed embarked on three rounds of bond purchases to stimulate the economy.

“We’ve called this whole market the bunker bull market, meaning people are still in the bunker and not really believing it quite yet,” Brian Belski, the New York-based chief investment strategist at BMO Capital Markets, said in a radio interview with Tom Keene and Michael McKee on “Bloomberg Surveillance.” “When people find out and realize they’re losing money for several months in a row, and they’ll see the positive returns in stocks, they’ll come back.”

Financial companies rallied the most out of 10 S&P 500 groups, jumping 0.7 percent ahead of results from the Fed’s stress tests. Twenty-three out of 24 members in the KBW Bank Index rose, as the gauge climbed 1.2 percent to its highest level since May 2010. Bank of America, the second-largest U.S. lender, added 2.9 percent to $12.26.

Stress Tests

After the close of regular trading, the Fed said 17 of the 18 largest U.S. banks could withstand a deep recession and maintain capital above a regulatory minimum. Only Ally Financial Inc., the auto lender majority-owned by U.S. taxpayers, fell below a 5 percent Tier 1 common ratio, a regulatory minimum and measure of financial strength, according to data released by the central bank in Washington.

Investors bought shares of companies tied to economic growth, sending material and energy stocks higher among S&P 500 groups. Technology shares advanced 0.3 percent.

Ciena surged 17 percent to $17.53. The maker of fiber-optic networking equipment reported first-quarter profit of 12 cents a share, compared with a 14-cent loss estimated by analysts on average. Revenue in the period also beat projections. Rival JDS Uniphase added 7.6 percent to $15.23.

Smithfield Foods Inc. rallied 11 percent to $24.68. The pork producer posted third-quarter adjusted earnings of 58 cents a share, topping the average analyst estimate of 50 cents.

Time Warner

Time Warner Inc. climbed 2.4 percent to $56.78 after saying its board authorized managers to later this year spin off the magazine unit, which publishes Time, People and Sports Illustrated, into a separate publicly held company. The sale will help Time Warner to focus on its film- and TV-production businesses, Chief Executive Officer Jeff Bewkes said.

Boeing jumped 2.5 percent to $81.05, its highest level since June 2008. Emirates, the largest operator of Boeing’s 777 aircraft, said the U.S. manufacturer is getting closer to offering a new version that will seek to defend its lead against Airbus SAS in the wide-body market.

Gap Inc. climbed 4.1 percent to $35.87, the highest level in four months. The retailer reported comparable-store sales in February rose 3 percent, exceeding the 2.3 percent increase estimated by analysts on average.

Apache Corp. advanced 2.9 percent to $75.65 as the fourth-largest U.S. independent oil and gas producer by market value may begin a process to sell deep-water assets in the Gulf of Mexico as early as next week, a person familiar with the matter said.

PetSmart tumbled 6.6 percent to $62.18 after forecasting sales growth of 2 percent to 4 percent in 2013, implying revenue of $6.89 billion to $7.03 billion. That missed the average analyst estimate of $7.08 billion. The company also forecast earnings of no more than $3.92 a share, compared with the average analyst projection of $3.94 a share.

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