NEW YORK (AP) -- U.S. stocks edged higher Thursday morning as investors were encouraged by a decrease in the number of claims for unemployment benefits last week and several strong earnings from companies.
Weekly applications for unemployment benefits fell 16,000 to 339,000, the second-lowest level in more than five years, according to the Labor Department.
The Dow Jones industrial average was up 65 points to 14,742 as of 12:42 p.m. Eastern, a gain of 0.4 percent. The Standard & Poor's 500 was up nine at 1,588, or 0.6 percent.
The drop in jobless claims is especially welcome in a job market that has suffered some recent setbacks. In March, employers added only 88,000 jobs. That was a sharp drop from the previous four months, when hiring averaged 220,000 per month. The unemployment rate fell to 7.6 percent from 7.7 percent, but only because more people stopped looking for jobs.
Many companies have been reporting better first-quarter results, but not necessarily because of stronger economic conditions.
So far this season, 71 percent of S&P 500 companies have beat analysts' profit expectations, according to John Butters, senior earnings analyst at FactSet. But that has come more from cost-cutting than from business going gangbusters. Fifty-six percent of those companies have missed estimates for revenue.
The trend has a precedent: Last year, less than half of S&P 500 companies beat revenue estimates in the second and third quarters, according to Butters.
Dow Chemical, which reported results Thursday, fit both descriptions. The company managed to increase profits even as revenue slipped because it cut costs and paid down debt. The stock was up 5 percent at $33.83.
In a report to clients Thursday morning, ConvergEx Group analyst Nicholas Colas noted the higher earnings but said they don't match the "real feel" of an economy still crimped by "lackluster jobs growth, a flattening rate of improvement in the housing market, and incremental government austerity measures."
"If U.S. companies have proven anything in the last four years of subpar macroeconomic results," Colas wrote, "it is that they can make gallons of lemonade from just a few shriveled bits of citrus."
Profit and revenue jumped at the cruise line Royal Caribbean as more people booked vacations than a year ago, and the stock jumped 7 percent to $36.66. This year's comparisons, however, are a bit unusual: Last year's results were hurt because of the sinking of the Costa Concordia, owned by rival cruise line Carnival.
Profit and revenue also rose at 3M, maker of Scotch tape and construction equipment. But the stock was down 3 percent at $104.51. Investors were unnerved when the company cut its profit predictions for the year, citing a "low-growth economic environment."
Profit and revenue fell at Cliffs Natural Resources and Carbo Ceramics, but the stocks went in opposite directions. Cliffs, which sells iron ore, shot 15 percent higher to $21.05. Carbo, which provides services and parts for the petroleum industry, plunged 13 percent to $74.92.
At Cliffs, the lower profits were still better than analysts had expected. At Carbo, investors were worried because the company said Chinese ceramic imports were hurting its pricing, and because drilling companies were taking more rigs out of action.
Safeway, a major grocery store chain, plunged 18 percent to $23.31 after reporting revenue that missed Wall Street's expectations, even as its earnings per share was in line with estimates. Safeway has been focusing on low prices to fend off competition from discounters such as dollar stores and big-box retailers.
The Nasdaq composite index was up 27 to 3,296, or 0.8 percent.
In other markets, gold futures rose 2 percent to $1,455 an ounce and the price of crude oil rose 1 percent to $92.50 a barrel. The yield on the benchmark 10-year Treasury note edged up to 1.72 percent from 1.71 percent.