Stocks Rise on Jobs Data, FedEx View

The Dow surges as investor confidence in the economy gets a lift from a surprise drop in jobless claims and a bullish outlook from FedEx. Alix Steel has The Real Story.
By Shanthi Bharatwaj ,

NEW YORK (

TheStreet

) -- Stocks pushed higher Thursday as investor confidence in the economy got a lift from a surprise drop in jobless claims and a bullish outlook from

FedEx

(FDX) - Get Report

.

The

Dow Jones Industrial Average

rose 42 points, or 0.4%, to close at 11,499. The blue-chip index ranged between 11,421-11,514 for the session. The

S&P 500

advanced 7 points, or 0.6%, to 1,243, while the

Nasdaq Composite

leapt 20 points, or 0.8%, to finish at 2637, its highest close since December 2007.

Hewlett Packard

(HPQ) - Get Report

,

Alcoa

(AA) - Get Report

and

Bank of America

(BAC) - Get Report

led the Dow higher, while

McDonald's

(MCD) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

American Express

(AXP) - Get Report

were the biggest losers among the blue chips.

Stocks rose across the board with capital goods, transportation and consumer cyclicals seeing the most momentum.

Volumes were light, however, as traders look to square off their positions ahead of the holidays. On the New York Stock Exchange, 1.01 billion shares changed hands, while the Nasdaq's volume totaled 1.75 billion. Breadth was positive on both exchanges with advancers outpacing decliners by a 2-to-1 ratio.

"I think you're going to see light volumes until sometime in January when there'll be some judgments regarding the economy and the changes in Washington with the new Congress," said Jay Suskind, senior vice president at Duncan Williams, adding that he expects to see sideways trading through the end of the year.

FedEx

(FDX) - Get Report

missed second-quarter estimates with an adjusted profit of $1.16 per share on sales of $9.63 billion, compared with Wall Street forecasts for of $1.31 per share on sales of $9.7 billion. However, the global shipping and delivery company raised its year-end profit forecast to between $5 and $5.30 a share, from between $4.80 and $5.25 a share, previously. The stock rose 2% to $94.22.

FedEx's view contributed to the growing optimism that the U.S. economy's pace of recovery is starting to pick up. Thursday's economic data was also broadly positive, if somewhat mild, aiding sentiment.

The Labor Department said initial weekly jobless claims fell to 420,000 from 423,000 in the week ended Dec. 11,

besting the slight increase to 425,000 claims from a previously-reported level of 421,000 that economists had been expecting.

The Philadelphia Federal Reserve Bank said manufacturing activity strengthened in December as the Philly Fed index rose to a reading of 24.3, from 22.5 in November. According to

Briefing.com

, economists had expected a December reading of 13.

The news came a day after the

New York Fed's Empire State manufacturing index rose to a reading of 10.57 in December from -11.14 in November,

exceeding economists' projections for a reading of 3.

The

Department of Commerce said housing starts rose 3.9% to 555,000 in November, from 534,000, previously, while November building permits fell 4% to 530,000, from 552,000. Wall Street had projected that housing starts would increase to 545,000, from an initially reported level of 519,000 and building permits were slated to climb to 560,000, from an originally reported level of 550,000, according to

Briefing.com.

The

Senate voted 81 to 19 on Wednesday in favor of President Obama's plan to extend the Bush-era tax cuts. House Democrats delayed a vote on the tax bill Thursday but House leaders said they still expect the bill to be passed.

Shares of

Mastercard

(MA) - Get Report

and

Visa

(V) - Get Report

plunged 10.3% and 12.6% to $ 223.49 and $67.15 respectively on reports that the Federal Reserve plans to propose imposing a 12-cent cap on the fees merchants pay for debit card transactions.

Oracle

(ORCL) - Get Report

said after the bell that its fiscal second-quarter profits rose 28% year-over-year to $1.87 billion, or 37 cents per share. Excluding one-time items, profits rose to 51 cents per share, beating estimates of 46 cents. Shares closed flat at $30.27 and were rising 3.6% in extended trading.

Blackberry maker

Research in Motion

(RIMM)

reported quarterly net income of $911 million or $1.74 per share, beating estimates by 10 cents. Shares tacked on 4% to $61.57 in late trades.

Packaged food company

General Mills

(GIS) - Get Report

reported a second-quarter adjusted profit of 76 cents per share on sales that grew 1% to $4.07 billion. Analysts had been expecting a profit of 78 cents per share on sales of $4.1 billion. The company also reaffirmed its full-year 2011 outlook for earnings of $2.46 to $2.48 per share, which excludes the second-quarter tax benefit. The stock gained 0.6% to $36.59 in the regular session.

Transocean

(RIG) - Get Report

shares finished down 3.6% to $69.31 after it was named in a

lawsuit filed by the U.S. government Wednesday related to the Gulf of Mexico oil spill.

BP

(BP) - Get Report

and

Anadarko Petroleum

(APC) - Get Report

, which were also named in the suit, saw their shares fall 0.2% and 0.1%, respectively.

Shares of

Aeropostale

(ARO)

jumped 8.7% to $25.61 on reports that the management had hired Barclays Capital as a strategic adviser to defend against any potential takeovers by a private firm.

Wynn Resorts

(WYNN) - Get Report

gained 4.8% to $105.59 after it received an upgrade from JPMorgan Chase.

Las Vegas Sands

(LVS) - Get Report

soared 7.1% to $45.25 after the company said it expects Vegas group room-rates to rise at least 10% by 2012.

In other news, federal authorities arrested and charged five more people in connection with insider trading. One of the

defendants allegedly divulged information on

Apple

(AAPL) - Get Report

.

The January crude oil contract slipped92 cents to trade at $87.70 a barrel, and the dollar weakened against a basket of currencies with the dollar index down by 0.2%.

Gold prices fell on profit taking as the metal lost appeal as a safe-haven. The February gold contract, the most actively traded gold future, traded $15 lower to settle at $1,370.40 an ounce.

The benchmark 10-year Treasury note strengthened 12/32, diluting the yield to 3.493%.

.

Overseas, Hong Kong's Hang Seng dropped 1.3% while Japan's Nikkei added 0.01%. The FTSE in London lost 0.02% while the DAX in Frankfurt ticked 0.1% higher.

--Written by Melinda Peer and Shanthi Bharatwaj in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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