Stocks pushed higher by job report; retailers rise

By Matthew Craft, Associated Press
Updated 1h 46m ago

NEW YORK — A rebound in June retail sales combined with strong jobs reports to push stocks near their highest levels of the year.

The government reported that the number of Americans who made first-time claims for unemployment benefits dropped to 418,000 last week, the lowest level in seven weeks.

Separately, payroll processor Automatic Data Processing said companies added 157,000 employees in June. The bulk of the hiring came from small businesses. The tally is more than double the number economists had forecast and far more than the 36,000 added the previous month.

Warm weather and deep discounts resulted in the best June sales figures for U.S. retailers since 1999. Investors have been concerned that high gas prices would constrain consumer spending as people made fewer shopping trips and looked for ways to save money. The higher sales figures reassured markets that consumers were becoming more willing to spend again.

"The closest thing to an unadulterated barometer of our progress is same-store sales," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Everything is tied to it: Sales drives profits, profits drive hiring and hiring drives sales. It's a neat, virtuous circle."

Stock trend

Dow Jones industrial average, five trading days
The news comes a day before the Labor Department releases its closely watched monthly employment report. Economists estimate the unemployment rate will remain at 9.1% and that employers added only 90,000 jobs last month.

Sales at Kohl's increased by more than double what analysts expected. Kohl's credited warmer weather in the Midwest and Northeast with pushing customers to shop for summer clothing.

At the close of trading, the Dow Jones industrial average was up 93 points, or 0.7%, at 12,719. The Standard and Poor's 500 index added 14 points, or 1%, to 1,353. The Nasdaq composite hit a new high for the year of 2,879 and closed up 39, or 1.4%, at 2,873.

The Dow and S&P 500 index reached their highest levels of 2011 on April 29. Since then, each index fell as much as 8% as a result of higher gas prices and a slowdown in the economy brought on by a shortage of parts from Japan and bad weather in the South.

Just three weeks ago, the S&P index had given up nearly all of its gains for the year. A rebound in a key manufacturing index and stronger sales figures from Nike and other companies pushed the stocks up.

Trading has been very light in the stock market this week. Markets were closed in the U.S. on Monday for the July 4th holiday. No major corporate earnings came out this week. Aluminum maker Alcoa Inc. becomes the first major U.S. company to report second-quarter earnings on Monday.

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