U.S. Stocks Inch Upward
NEW YORK—U.S. stocks edged higher as an unexpected rise in initial claims for unemployment benefits prompted speculation the Federal Reserve will announce further economic-stimulus efforts, offsetting concerns about Spanish bond yields rising to a euro-era high.
The Dow Jones Industrial Average rose 33 points, or 0.3%, to 12528. The Standard & Poor’s 500-stock index edged up less than one point to 1315, led higher by consumer-staples shares. The technology sector lagged behind; the tech-heavy Nasdaq Composite eased six points to 2813.
“The only reason you could possibly be trading higher, based off of the morning economic data, is the odds of QE,” said Dan Greenhaus, chief global strategist at New York brokerage BTIG LLC, referring to the prospect of government purchases of U.S. bonds in a bid to bolster the economy. “There’s nothing in the morning data that’s ‘good.'”
The number of Americans filing for jobless claims rose to a seasonally adjusted 386,000, the Labor Department said, higher than the 377,000 forecast by economists in a Dow Jones Newswires poll. The prior week’s figure was revised higher. Meanwhile, U.S. consumer prices fell in May, in line with expectations, as plunging gasoline costs offset higher rents and medical-care prices. Excluding food and energy, consumer prices rose 0.2% from April, also matching economists’ forecasts.
European markets were mostly lower as the increase in Spanish bond yields outweighed reassuring news of reasonable demand at an auction of Italian government bonds. Italy sold €4.5 billion ($5.7 billion) of bonds, the maximum it had targeted, though at much higher rates than in previous auctions. The Stoxx Europe 600 was down 0.6%.
The yield on Spain’s benchmark 10-year bond rose to 6.96% before pulling back slightly. Moody’s Investors Service downgraded Spain’s debt three notches late Wednesday to Baa3, the brink of junk territory. That increased speculation that Spain is likely to have to seek an international bailout, in addition to the aid for banks its government is seeking. But Spain’s IBEX-35 stock index rose 0.5%.
Investors also braced for Sunday’s Greek election, which could determine whether the country remains in the euro zone.
Asian markets were broadly lower after Spain’s downgrade, with Japan’s Nikkei Stock Average losing 0.2% and China’s Shanghai Composite giving up 1%.
Crude oil futures ticked down 0.1% to $82.51 a barrel, while gold futures slid 0.3% to $1,614.40 an ounce. The U.S. dollar inched lower against the euro and the yen.
In the corporate arena, slot machine maker International Game Technology IGT +10.89% rose, leading the S&P 500 higher, after unveiling plans to buy back stock.
U.S.-listed shares of Finland’s Nokia NOK -14.70% dropped after the handset maker announced a shake-up of management and said it would cut an additional 10,000 jobs by the end of next year as it deals with increased competition.
Smithfield Foods SFD -7.49% fell after the pork processor reported fiscal fourth-quarter earnings that missed analyst expectations, according to FactSet Research. The company also said it plans to buy back up to an additional $250 million worth of its common stock.