Bank, technology stocks lure in bargain hunters

NEW YORK -- Stocks rose Thursday after three mostly down days as traders bought beaten-down financial and technology stocks.

The buying was subdued after a worse-than-expected weekly unemployment report added to concerns that the economic recovery might not come as quickly as hoped.

The market is down sharply this week as investors worry that the optimism that fed a massive spring rally might have been premature. The Standard & Poor's 500 index is still 32% above the 12-year low it hit in early March.

The Dow Jones industrial average ended Thursday up 46 points, but lagged gains by the S&P 500 index and Nasdaq composite index. Financial stocks rose after falling earlier in the week and lifted the KBW Bank Index 3.7%.

Technology shares gained after software maker CA said its fiscal fourth-quarter earnings rose as cost-cutting compensated for a drop in revenue.

The advance came as the market grappled with another reminder of the strained job market. The Labor Department's weekly data showed more workers filing for unemployment claims. New claims jumped to 637,000, above what economists had forecast.

The overall number of people seeking unemployment benefits grew faster than expected, rising to 6.6 million, while continuing claims hit a 15th straight weekly record.

Analysts had expected some rebound after stocks tumbled Wednesday, sending the S&P 500 index down 2.7%. The market was shaken by a Commerce Department report that retail sales fell unexpectedly in April for the second straight month, and by a separate report that showed home foreclosures rising.

The twin hits to two key areas of the economy — consumer spending and the housing market — have led investors to drop stocks this week and seek the shelter of bonds. That put on hold a powerful rally that carried the market through March and April.

"Expectations got overblown and the harsh unfortunate reality is that unemployment continues to climb and that consumers remain under pressure," said Stuart Schweitzer, global markets strategist at J.P. Morgan's Private Bank. "The green shoots of recent weeks are minor compared with the field of dandelions still present in the economy."