Wall St up as jobless claims lift mood

William Mcinerney, right, works with fellow traders on the floor of the New York Stock Exchange. File photo / AP

Wall Street rose after better-than-expected jobless claims data and an unexpected decline in producer prices suggested the US economy is growing at a pace that is unlikely to warrant an interest rate increase soon.

In late trading in New York, the Dow Jones Industrial Average added 0.98 per cent, the Standard & Poor's 500 Index climbed 1.01 per cent, while the Nasdaq Composite Index advanced 1.29 per cent. Also helping stocks was a gain in US Treasuries, stemming a recent run-up in bond yields globally.

"The bond markets are stabilising and jobless claims were positive, so it's giving a more positive spin to the day today," Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle Investments, told Bloomberg.

Gains in shares of Microsoft and those of Apple, both up 2.3 per cent recently, led the Dow higher. The Dow rose as high as 18,254.37, inching closer to its record high of 18,288.63.

A Labor Department report showed initial claims for state unemployment benefits unexpectedly declined, falling 1,000 to a seasonally adjusted 264,000 for the week ended May 9. Separately, the Labor Department's producer price index for final demand also posted a surprise drop, declining 0.4 per cent in April.

The data add to recent evidence, such as Tuesday's disappointing retail sales report for April, that there's little pressure on the Federal Reserve to raise interest rates in the immediate future.

"Despite an even tightening labour market, inflation is totally under control, complicating the Fed's decision-making," Joel Naroff, chief economist at Naroff Economic Advisers in Holland, Pennsylvania, told Reuters. "The Fed must keep its finger on the trigger, even if it doesn't have to pull it just yet."

Indeed, "we find support for our expectations that the Fed will not raise rates until Q4 2015," Jason Schenker, chief economist and president of Prestige Economics in Austin, Texas, wrote in a research note, according to Bloomberg.

Shares of Shake Shack initially jumped 6.5 per cent after the company unexpectedly reported a quarterly profit and upgraded its full-year revenue forecast. The stock recently traded up 0.5 per cent.

Shares of Kohl's sank, last trading 12 per cent lower, after the department store posted weaker-than-expected sales for the quarter. It followed disappointing sales from rivals Macy's and JC Penney, and underpinned concern about the pace of US consumer spending.

"Weather, port issues, and weak consumer spending overall is the department store theme in 1Q-despite a plan to recover traffic, it does not appear that KSS escaped the trend," Evercore ISI analyst Matt McGinley wrote in a note, according to Reuters.

In Europe, the Stoxx 600 Index finished the session with a 0.6 per cent increase from the previous close. The UK's FTSE 100 Index rose 0.3 per cent, France's CAC 40 Index added 1.4 per cent, while Germany's DAX rallied 1.8 per cent.