Stocks Continue Rally on Jobless Drop  09/09 16:02

   Stocks extended their September rally Thursday following more encouraging 
news on the job market.

   NEW YORK (AP) -- Stocks extended their September rally Thursday following 
more encouraging news on the job market.

   The Dow Jones industrial average rose 28 points after the Labor Department 
said first-time claims for unemployment benefits fell last week to the lowest 
level in two months. In another hopeful sign on the economy, the trade deficit 
narrowed in July.

   Stocks pared their gains in the afternoon after a report came out saying 
Deutsche Bank is considering raising new money through a stock sale in what 
could be another troubling sign for European banks. Trading volume was very 
light.

   The jobs report came in much better than analysts had expected and added to 
other positive signals on the economy, including a pickup in job creation for 
August reported last week. Treasury prices and gold fell as investors found 
themselves with more appetite for risk.

   "The employment report is still the king of kings," said Edwin Denson, head 
of market strategy at Singer Partners LLC. "The labor market is still the 
indicator, that if it's positive, would give people the most comfort."

   Unemployment claims have still not fallen enough to suggest that widespread 
hiring is around the corner, but investors have taken solace in recent 
employment news that suggest the economy will continue to grow slowly during 
the rest of the year. Traders concerned about the potential for the economy to 
slide back into recession drove stocks lower through most of August.

   "All we need is slightly good news ... relative to expectations, and at this 
point expectations are relatively poor," said Tyler Vernon, principal and 
portfolio manager at Biltmore Capital Advisors.

   Stocks have rallied since the beginning of September on the improving 
outlook for the economy, and have risen in six out of the past seven days.

   The Dow Jones industrial average rose 28.23, or 0.3 percent, to close at 
10,415.24. The Dow had risen as much as 90 points earlier.

   The Standard & Poor's 500 index rose 5.31, or 0.5 percent, to 1,104.18, 
while the Nasdaq composite index rose 7.33, or 0.3 percent, to 2,236.20.

   Rising stocks outpaced those that fell three to two on the New York Stock 
Exchange, where volume was extremely low at 840 million shares.

   First-time claims for unemployment benefits fell to 451,000 last week, much 
better than the 470,000 expected by analysts polled by Thomson Reuters. But 
that's still well above the 400,000 level that economists say is a signal of 
strong economic growth and job creation.

   Bond prices fell, sending the yield on the 10-year Treasury note up to 2.76 
percent from 2.66 percent late Wednesday. That yield helps set interest rates 
on mortgages and other consumer loans.

   The Dow had already jumped 3.7 percent in September heading into trading 
Thursday. Stocks have climbed all but one day so far this month. Major indexes 
took a pause from the recent rally on Tuesday when worries about European 
government debt problems flared up early in the week.

   There were concerns during the spring that mounting European debt would 
stunt a global recovery. Stocks fell sharply through much of the spring because 
of those worries.

   Those worries largely dissipated after several European nations successfully 
auctioned new debt this week. However the Deutsche Bank report, which came out 
after European markets closed, could again renew questions about whether banks 
there could handle losses if government's default.

   Deutsche Bank shares fell $1.97, or 3.2 percent, to $59.99.

   In corporate news, McDonald's Corp. shares dropped as a jump in monthly 
sales fell short of expectations. The fast-food chain's stock has been climbing 
steadily throughout the year as sales rose. McDonald's shares fell $1.71, or 
2.3 percent, to $74.37.


(KM)