Stocks opened higher Thursday as investors took heart from signs of recovery in the economy and the Federal Reserve's statement that the economic outlook was improving.
It's not so much that the economic news is good, it's that traders see glimmers of hope in the bad news, like yesterday's GDP report, where the market focused on the drop in inventories as an indicator that companies have really pared down and may have to start manufacturing and stocking up soon.
In today's economic news, jobless claims unexpectedly fell by 14,000last week to 631,000, though continuing claims hit another record, 6.271 million. Jobless claims typically peak about a month before a recession is over.
Meanwhile, personal income fell 0.3 percent in March, while spending dropped 0.2 percent. Both came in worse than expected. The personal savings rate climbed to 4.2 from 4.0.
The Fed's stance in its statement released yesterday was consistent with some data showing that the economy remained on track to improve later this year despite a surprisingly steep 6.1 percent decline in first-quarter GDP.
Publicly-traded automakers GM and Ford rose after a White House official said Chrysler is headed for bankruptcy protectionafter talks with debt holders collapsed. An announcement from the White House is expected at noon.
Earlier, Italy's trade minister said there was "reasonable optimism" that a deal with Fiat can still be reached.
Over in the financial sector, Bank of America shareholders stripped CEO Ken Lewis of his chairman title late Wednesday. He will continue to be CEO and hold a seat on the board. Walter Massey will succeed Lewis as chairman.
On the earnings front, Proctor & Gamble , maker of Gillette razors and Tide laundry detergent, soared past forecasts butclipped its outlook.
Rival Colgate Palmolive also beat expectations, helped by cost cuts, and expects a profit for the remainder of the year.
ExxonMobil , which had been delivered blockbuster quarters when oil was soaring, missed its target.Viacom
reported itsprofit shrunk
as cable ratings declined.
Among other companies that reported today were Motorola , Comcast , Dow Chemical and Kellogg .
After Wednesday's closing bell, Visa beat earnings expectationsafter the credit-card company raised prices.
Starbucks also topped forecasts, despite an 8-percent drop in sales. The coffee chain also announced it would close almost 1,000 stores around the world.
The World Health Organization raised its swine flu-threat level to 5, which means human-to-human spread has occured in at least two countries in one WHO region and that "a pandemic is imminent." (See the WHO explainer on pandemic threat levels.)
Still to Come:
THURSDAY: Senate Appropriations Committee meets to discuss administration's request for more money for Iraq, Afghan wars; Kansas City Fed report; Fed's Volcker speaks; Earnings from MetLife after the bell
FRIDAY: Auto sales; Fed's Geithner, Bullard speak; Reuters/Univ of Mich consumer confidence; ISM manufacturing index; factory orders; Earnings from Chevron, Clorox, MasterCard and Simon Property
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