US stocks gain on unemployment report

US stocks rise after unemployment claims report; tech stocks fall on Cisco's caution

Associated Press
Dow breaks 6-day losing streak, barely
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In a May 17, 2012 photo specialist Stephen D'Agostino works at his post on the floor of the New York Stock Exchange. Wall Street is poised for another retreat at the open following six straight days of losses — the Dow Jones industrial average was down 0.3 percent, while the broader S&P 500 futures fell 0.1 percent. (AP Photo/Richard Drew)

Stocks rose modestly on Wall Street Thursday, breaking a six-day losing streak for the Dow Jones industrial average, after the government said weekly jobless claims edged down.

The lower jobless number suggests that employers may accelerate hiring this month.

In late morning trading, the Dow rose 27 points to 12,862. The Standard & Poor's 500 index gained four points to 1,358. The Dow had been up 96 points earlier.

The tech-heavy Nasdaq composite index fell six points to 2,928. Cisco Systems, one of the 30 stocks in the Dow average, plunged 9 percent after the networking giant warned investors that technology spending appeared to be slowing down and that its revenue would rise much less than analysts had been expecting this quarter. Hardware maker Oracle fell 2 percent.

Before Thursday, the Dow had fallen for six days in a row, its longest losing streak since August. Investors were encouraged by the Labor Department's report that applications for unemployment benefits dropped 1,000 to 367,000 in the week ending May 5. The four-week average, which economists watch more closely, fell 5,250 to 379,000. When that figure remains consistently below 375,000, it suggests that job growth is strong enough to lower the unemployment rate.

The numbers could dispel nascent fears that that strongest yearly start for hiring since the recession ended 2009 was sputtering.

Stocks also benefited from news that Spain would take over Bankia SA, the country's fourth-largest bank, which has high exposure to bad property loans. The government is hoping to convince investors that Spain won't need a bailout.

"Europe's problems are by no means being solved. But the feeling that there is some support there probably helps sentiment a little bit," said Ed Hyland, a global investment specialist with J.P. Morgan Private Bank.

The news helped U.S. financial stocks, which would be vulnerable to an increase in financial stress in Europe. Citigroup rose 1.6 percent and JPMorgan Chase rose 1 percent.

European stocks rose. Spain's IBEXC 35 index jumped 3.1 percent on the Bankia news and a drop in Spain's borrowing costs. Britain's FTSE 100 rose 0.2 percent, Germany's DAX rose 0.6 percent.

Other U.S. stocks on the move included:

— Pfizer rose 1.6 percent after the drugmaker got preliminary approval for an arthritis drug.

— Avon fell 2.1 percent after beauty products maker Coty Inc. raised its offer to buy Avon but also said it will withdraw the latest bid if it doesn't get a response by the close of business Monday.

— Kohl's fell 3 percent after price-cutting led to a 23 percent drop in its first-quarter profit.

Oil prices rose 21 cents to $97.45 per barrel.

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