Thursday’s Market Recap: Stocks Rally Despite Record Jobless Claims

The markets rallied today with the Dow (^DJI) up over 2% to close at 7924.56.  The NASDAQ (^IXIC) was up 58.06 to close at 1587.00 while the S&P (^GSPC) was up 18.98 to close at 832.86.  The price of the 10-year rose with yields ending the day at 2.746%.  Oil contracts were up settling at $54.34 while gold contracts fell to settle at $942.20.

The tech heavy NASDAQ rose today led by Google (GOOG) and Research in Motion (RIMM) who were up the entire day.  Both companies benefited from analysts making positive comments about their stocks.  An analyst from Jefferies & Company cited that they saw positive signs in the internet sector, boosting Google’s price from the opening bell.  Google has dropped over -55% from their one year high in July, and has suffered during the economic downturn.  RIMM was benefited by an analyst from Goldman Sachs (GS) who said that RIM had “improving margins and valuation”.  The analyst expects RIMM to have earnings in-line with projections, when they have their 4Q earnings call on April 2.

Best Buy (BBY) was up over 12% today after profits fell less than consensus estimates.  Best Buy’s mobile phone sales in Europe helped to boost their results and contributed strongly for beating estimates.  Best Buy’s also forecasted earnings for the coming year to be higher than analyst estimates.  Best Buy’s share price closed at its highest point since September and the retail giant is looking into the future very positively.  Best Buy’s competition has now shifted strongly to Wal-Mart (WMT) as their major competitor Circuit City went bankrupt earlier this year.  It will be interesting to see how Wal-Mart and Best Buy fight for dominance in consumer electronics.

Today jobless claims set a new record as the statistic increased for the 10th straight week.  New claims rose to a seasonally adjusted 652,000 last week from the previous week’s number of 644,000.  There are now 5.56 million people claiming benefits, this above the analyst’s estimates of 5.48 million.  Unemployment rates were at 8.1% in February and have been predicted to be as high as 9.4% by the end of the year.  Unemployment has been seen in government in the US Postal Service and in blue chip companies like IBM (IBM).  IBM recently laid off 5,000 jobs and plans on shifting a large number of jobs overseas, specifically to India.  These cost cutting measures have been seen across many companies in an effort weather the economic downturn.  The market needs to see positive economic data before they start new hirings  President Obama says that it will be a long time before energetic hiring happens, maybe a year until so at the earliest.

Disclosure: The fund the author is associated with is long WMT, IBM, and GOOG.

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