Stocks Lift Ahead of Jobs Report

(Updated with stock prices.)

NEW YORK ( TheStreet) -- Stocks in New York moved modestly to the upside Thursday, as investors shook off mixed data to focus on Friday's unemployment report.

The major indices ended near their highs of the day. The Dow Jones Industrial Average advanced 63.94 points, or 0.7%, to 9344.61, while the S&P 500 tacked on 8.49 points, or 0.9%, to 1003.24. The Nasdaq Composite added 16.13 points, or 0.8%, to 1983.2.

Financials did particularly well, with the KBW Bank index rising 2.5%, and Citigroup ( C) and UBS ( UBS) gaining 4.6% and 5%, respectively.

There was news aplenty with a rebound in Chinese stocks , some expectation-topping retail sales, and mixed economic data , but Wall Street stayed relatively focused on Friday's jobs report.

"There's a lot of caution out there that says let's not get ahead of our headlights, it certainly keeps things on the conservative side and keeps people from taking long positions," says Brian Bethune, chief U.S. financial economist at HIS Global Insight.

Some of that caution shined through in gold, which rose to $999.50 an ounce as investors migrated to safety and bet on a weakening dollar, sending metals stocks higher.

Expectations are for a slight increase in the unemployment rate to 9.5% from 9.4% and a decrease of 225,000 in nonfarm payrolls, an improvement from the 247,000 decline the month prior.

"Tomorrow's numbers will just lend more credence to the fact that we are experiencing a recovery, but where the jobs are not forthcoming," says Quincy Krosby, chief market strategist for Prudential Annuities, adding that this is not unusual.

But, "this is the tug of war ... if you cannot produce good solid jobs with decent wages in this country, you should not expect a very forceful recovery in GDP," says Krosby. "So tomorrow will be one more data point, and then we are going to look for more signs that those data are getting not just less bad, but better."

Krosby and Bethune agree that if the number catches the market off guard, to the upside or downside, it could be a major market-moving event. "But it's got to really surprise the market," says Krosby. (Click below to hear Krosby break down the jobless claims and services data and what to expect from tomorrow's highly anticipated unemployment report.)

Thursday's economic data gave mixed signals. There were 570,000 new jobless claims last week, roughly 6,000 more than expected. That's less than the week prior, but only because that figure was revised upward to 574,000 from 570,000. The number of people receiving benefits increased unexpectedly 92,000 to 6.23 million, vs. expectations for a decline to 6.13 million.

" The weekly data give us a more real-time picture of the employment scenario of the consumer, and obviously coming out of this recession we are watching the consumer very closely," says Krosby. "Needless to say, the market and the general economy will feel better once we start to see the consumer start to feel better about jobs. If you ask a man on the street what's his biggest worry, it is about jobs."

Wall Street looked past those data, however, as the Institute for Supply Management's report on the services sector showed improvement. The index increased to 48.4 in August, from 46.4 in July, slightly better than expectations for 48.

Elsewhere, investors had August retail figures to digest. Among them, Costco ( COST) said same-store sales fell 2% in August, vs. an expected decline of 5.7%. Net sales for the month were $5.4 billion, flat with a year earlier.

Kohl's ( KSS) also topped expectations, reporting a 0.2% increase, vs. the 1.7% decline anticipated.

Costco and Kohl's advanced 8.6% and 4.2%, respectively.

On the other hand, Saks ( SKS) reported a 19.8% decline in comparable sales, missing the analyst estimate for a 14.1% drop. Still, shares advanced 7.5%.

In other news, Japanese drugmaker Dainippon Sumitomo Pharma confirmed it has reached an agreement to buy Sepracor ( SEPR) for $23 a share, or $2.6 billion, in an effort to help sell its Lurasidone drug in the U.S.

Focus was again on China in early trading. This time it was after a 4.8% increase in the Shanghai Composite that occurred amid a report that banks lent more than expected in August and optimism that the Chinese government would take steps to promote the health of the market.

Stocks overseas were mixed. In Europe, London's FTSE 100 and the DAX in Frankfurt fell 0.4% each. In Asia, the Nikkei in Japan fell 0.6%, while the Hang Seng in Hong Kong gained 1.2%.

Crude oil futures, gave up early advances and ultimately declined 9 cents, to $67.96 a barrel.

-- Written by Elizabeth Trotta in New York.

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