Good economic news gives Wall Street a lift

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By John Melloy
Bloomberg News Service

U.S. stocks rose today after government reports on unemployment benefits and inflation suggested the economy will pick up. Texas Instruments Inc., whose microchips run half of the mobile telephones sold last year, advanced after an analyst recommended the shares.

AnnTaylor Stores Corp. moved higher after the women's clothing chain said quarterly sales climbed at the fastest pace in more than two years.

The Standard & Poor's 500 Index advanced 6.48, or 0.7 percent, to 990.51 in New York, for its sixth gain in seven days. The Dow Jones Industrial Average increased 38.80, or 0.4 percent, to 9310.56, and the Nasdaq Composite Index rose 13.70, or 0.8 percent, to 1700.31.

"The economy is accelerating, and earnings estimates are likely to be too low as the economy improves," said Forrest Armstrong, who helps manage $1.2 billion for Compass Bank Asset Management in Houston. "The market may tread water for a while, but as more companies talk about improving demand, people will start to feel more positive."

Eight stocks rose for every five that fell on the New York Stock Exchange. More than 1.19 billion shares changed hands on the Big Board, down 13 percent from the same time a week ago. Trading from Friday through Wednesday has been the NYSEâs slowest four-day stretch this year.

Initial filings for jobless benefits held at less than 400,000 for a fourth straight week, a Labor Department report showed. States received 398,000 applications for unemployment insurance last week. The four-week moving average, a less volatile measure, declined to a six-month low of 394,250 from 398,500.

Producer prices, such as those paid to factories and farmers, rose 0.1 percent in July. Knocking out food and energy, prices rose 0.2 percent after dropping 0.1 percent in June. Higher prices and a growing economy mean rising profits for makers of products such as lumber, paper and metals.

The S&P 500 has advanced 12.6 percent this year amid optimism accelerating growth will lift profits. The rally has stalled, as the benchmark has fallen 2.1 percent from its 2003 high, set June 17.

Texas Instruments added 73 cents to $20.05. The company is the best stock to own to take advantage of a recovering semiconductor industry, said Hans Mosesmann, an analyst at SoundView Technology Group. He raised the shares to "outperform" from "neutral." Texas Instruments also reiterated its sales forecast for this quarter at an investor conference.

AnnTaylor added 65 cents to $33.65. The New York-based clothing retailer said profit in the second quarter ended Aug. 2 climbed 16 percent. The company forecast third-quarter profit of as much as 61 cents a share, more than the average estimate of 59 cents from analysts surveyed by Thomson Financial.