Stocks reverse early losses, move slightly higher
NEW YORK -- Investors are shrugging off an unexpected rise in jobless claims and cautiously buying stocks.
Initially, investors sent stocks lower Thursday after the government said new claims for unemploymenet benefits rose by 15,000 to 627,000 last week. The market expected a decline.
While disappointing, the report was not enough to stop investors from moving back into stocks.
Rising unemployment claims shouldn't be surprising to investors, because unemployment usually continues to increase even when the economy is improving, said Arthur Hogan, chief market analyst at Jefferies & Co.
"Investors are really on guard here. We're at a juncture where investors don't know what the next 10% move is — whether it's up or down," Hogan said.
Investors also got a piece of good news from a slightly improved reading on gross domestic product. First-quarter GDP shrank at a 5.5% annual pace, the Commerce Department said, less than the previous estimate of 5.7%.
Uncertainty about when the economy will turn around, and how fast it will grow when it finally does, have made for a rocky market this month. The Dow Jones industrial average remains up 26.8% from its 12-year low hit on March 9, but is down nearly 500 points, or 5.7%, from the five-month high it reached on June 12.
On Wednesday, the Fed said that "sustainable economic growth" should gradually resume, and inflation will "remain subdued for some time." The statement did little to reassure investors, though, causing stocks to give up gains and finish mixed. Some were hoping the central bank would articulate how it will curb inflation.
Anxiety about the economy's rebound have weighed on investors in recent weeks amid a flood of mixed signals. Some reports continue to exceed expectations, while others disappoint. Analysts say traders need to see more concrete evidence of growth before restarting the market's rally.
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