Bank, energy stocks pull market higher
NEW YORK -- Traders are betting improving prospects for banks and rising energy prices will pay off.
Stocks gained steam after a slow start Thursday as financial and energy shares pulled the market higher and investors sidestepped safety bets in areas like health care or consumer necessities.
Investors gained some confidence in the prospects for the overall economy after the number of workers continuing to receive unemployment benefits unexpectedly fell for the first time in 20 weeks. Analyst upgrades of bank stocks and rising oil prices attracted investor dollars to those parts of the market.
The drop in unemployment rolls, as well as in weekly claims, provided investors a fresh nugget of hope that the economy could be finding more stable footing. The idea that the economy is halting its slide has driven a powerful rally that has lifted stocks more than 30% in three months.
The data arrived a day ahead of the government's monthly tally of job losses — often seen as the most important report on the economic calendar. Investors are looking for any sign that unemployment is ebbing because that could help shore up consumer spending, retail sales and the housing market.
"Things seem to have stabilized and people are hunting for any sort of information they can get to determine the next move in the market and the economy," said Jim Sinegal, equity analyst at Morningstar in Chicago.
According to preliminary calculations, the Dow Jones industrial average rose74.96, or 0.9%, to 8,750.24. The broader Standard & Poor's 500 index rose 10.70, or 1.2%, to 942.46, and the Nasdaq composite rose 24.10, or 1.3%, to 1,850.02.
The gains in financial and energy stocks overshadowed mixed reports from retailers on their May sales.
Banks got a boost after RBC Capital Markets analysts said the worst of the financial crisis is over. The KBW Bank index, which tracks 24 of the nation's largest banks, rose 4.1%.
KeyCorp jumped 88 cents, or 19.1%, to $5.48 after an upgrade from RBC, while Goldman Sachs Group rose $6.61, or 4.7%, to $148.76 after a Bernstein Research analyst raised his rating.
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