Stocks appear headed to sharply higher opening

[October 08, 2009]  NEW YORK (AP) -- Stocks appear headed to a sharply higher opening Thursday after Alcoa kicked off earnings season with an unexpected profit and weekly jobless claims fell more than expected.

A number of big retailers, meanwhile, reported lower September sales at stores open at least a year but some still beat analysts' expectations.

U.S. stock futures rose, extending a rally overseas following the upbeat report from Alcoa.

The Labor Department said new claims for jobless benefits fell to 521,000 last week, down from the previous week's upwardly revised total of 554,000. It was the lowest level seen since early January, providing further evidence that the nation's job crunch is easing and the economy is starting to recover.

Economists polled by Thomson Reuters were expecting new claims to fall to 540,000.

The number of people continuing to claim benefits fell to 6.04 million. Analysts expected continuing claims to rise slightly.

Ahead of Thursday's market opening, Dow Jones industrial average futures rose 69, or 0.7 percent, to 9,742. Standard & Poor's 500 index futures rose 9.60, or 0.9 percent, to 1,063.20, while Nasdaq 100 index futures rose 16.00, or 0.9 percent, to 1,724.00.

Futures had been higher throughout the morning after aluminum company Alcoa Inc. surprised investors following the market's close Wednesday by reporting its first profit in nine months. The profit of $77 million, or 8 cents per share, was due to cost cutting and rising sales to automakers. Alcoa also said worldwide aluminum demand is expected to increase by 11 percent for the second half of the year.

Traditionally the company to start earnings season, Alcoa's better-than-expected report and upbeat demand prediction reassured investors that the economic recovery is well under way.

Investors will be examining earnings reports in upcoming weeks for more signs of growth in the economy. Companies mostly beat modest earnings expectations during the second quarter because of cost-cutting measures. Now investors will want to see revenue and sales growth to help justify the market's strength in recent months.

Any forecasts from companies will also be closely watched to see where executives believe the economy is headed.

New data from retailers shows sales are still falling amid ongoing concerns about the economy. However, despite the weakness, sales from many companies have topped expectations.

Teen retailer Wet Seal Inc. and Macy's Inc. reported smaller-than-expected declines in sales at stores opened at least a year. The measure is considered a key indicator of a retailer's health.

Consumer spending accounts for more than two-thirds of all economic activity, so improvement in retail sales would provide further evidence of a rebound.

Meanwhile, bond prices fell slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.20 percent from 3.19 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.05 percent.

The dollar continued its fall against other major currencies. Gold prices continued to climb higher on the weakness of the dollar. Gold again hit a new record Thursday morning, rising as high as $1,059.60 an ounce.

Overseas, Japan's Nikkei stock average rose 0.3 percent. In afternoon trading, Britain's FTSE 100 gained 0.7 percent, Germany's DAX index rose 1.4 percent, and France's CAC-40 jumped 1.5 percent.

[Associated Press; By STEPHEN BERNARD]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.