U.S. stocks and exchange traded funds (ETFs) are shrugging off discouraging unemployment news and rallying on the backs of other encouraging economic indicators in morning trading.
The Labor Department reported that new jobless claims unexpectedly increased last week by 15,000 to a seasonally adjusted 627,000, surprising most economists, who expected the number to drop to 600,000. This increase added to the total number of Americans receiving unemployment benefits shooting the number up to 6.74 million.
On a positive note, a revised reading on gross domestic product indicated that a turnaround in the economy is not a far-fetched idea. The broadest measure of the nation’s output suggested the economy posted an annualized decline from January through March by 5.5%, a bit better than the 5.7% estimated a month ago, and economists think that the economy is shrinking at a slower pace, states the Associated Press.
To add to today’s good news, consumers boosted their spending at a 1.4% rate, down from a 1.5% growth rate estimated last month. This sent the Retail HOLDRs (RTH) up nearly 2% in intraday trading.
In the financial world, Bank of America (BAC) has managed to raise more money than the government has said it needed to withstand a deepening recession. Bank of America is expected to raise a whopping $38 billion worth of capital, $4.1 billion more than the $33.9 billion the government said it needed to raise, surprising most in how quickly the bank was able to do it. This is all despite the controversy stirred up that the Fed may have halted a possible merger between Bank of America and Merrill Lynch. The news sent the Financial Select SPDR (XLF) up nearly 1% in morning trading; BAC is 7.9%.
The wheels seem to be turning in Washington. Vice President Joe Biden recently announced that more than half of economic stimulus money set aside for highway projects has already been allocated. In more detail, he stated that $19 billion has been set aside for 5,300 transportation projects. The news sent the iShares S&P Global Infrastructure Index (IGF) up nearly 2% in morning trading.
Overall, all three major indices are up in morning trading. The Dow Jones Industrial Average is up 1.8%, the S&P 500 is up 1.8% and the Nasdaq gained nearly 1.6%.
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Kevin Grewal contributed to this article.