Share prices higher on economic figures

By Meg Richards
Associated Press

NEW YORK — Stocks were moderately higher today as the government reported a drop in weekly unemployment claims and a rise in manufacturing activity. But many investors remained wary of taking big stakes ahead of a key employment report.

The Labor Department said fewer people filed new applications to collect unemployment benefits last week, sending jobless claims to their lowest level in two weeks. Economists had expected a rise.

While the pace of layoffs seems to be slowing, companies haven't been in a rush to hire new workers. Many analysts are hoping for a strong report tomorrow on the number of jobs created in March. Most want to see the economy add 200,000 to 300,000 new jobs for several months before they'll declare a recovery, but they've been deeply disappointed so far this year.

"The jobs report is going to be very big," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "We know how the market will react to a negative number, but it'll be interesting to see how it reacts to a positive number. We just don't know the extent of what we could see."

According to preliminary results, the Dow Jones industrial average advanced 15.63, or 0.2 percent, to close at 10,373.33.

The broader gauges were also higher. The Nasdaq composite index added 20.78, or 1 percent, to 2,015.00. The Standard & Poor's 500 index rose 5.96, or 0.5 percent, to 1,132.17.

Analysts said the day's upward trend was solidified by a report from the Institute for Supply Management, which showed substantial growth in the nation's manufacturing sector in March. Economists had expected a decrease.

"This supply management report, coming above expectations, was really the revitalizing factor that took a lackluster move to a decent move," said Larry Wachtel, market analyst at Wachovia Securities. "The hesitancy you see now is related to the jobs number. Everybody's laying low."

In the March jobs report, investors are "looking for a Goldilocks number, not too hot, not too cold," Wachtel said. A number that's too high might motivate the Federal Reserve to raise interest rates sooner rather than later, he said, while a number that's too low might be seen as an indictment of the pace of the recovery.

"The bottom line is, if all these things are conjectural, why am I going to take a big position this afternoon?" Wachtel said.

In other economic news today, the Labor Department said wholesale prices ticked up 0.1 percent in February after a 0.6 percent rise in January — a moderate change that indicates inflation has remained in check even as the economy has grown. Separately, the Commerce Department reported a slight dip in construction spending in February, due partly to bad weather.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange.