Unemployment news pushes S&P index to five-year high
January 24, 2013 9:27 a.m. - Updated: 9:29 a.m.
NEW YORK (AP) — A sudden drop in claims for unemployment benefits helped push the Standard & Poor’s 500 index above 1,500 for the first time since December 2007.
Apple’s stock sank 10 percent, pulling the Nasdaq composite index lower, after the electronics giant predicted slower sales.
The Labor Department reported that the number of Americans applying for unemployment aid fell last week to the lowest since January 2008. Applications dropped 5,000 to 330,000. The four-week average also hit a five-year low.
The Dow Jones industrial average was up 66 points at 13,846 as of 12:10 p.m. EST.
The Standard & Poor’s 500 index edged up 5 points to 1,500. The S&P 500 last closed above 1,500 on Dec. 10, 2007. It’s already up 5.1 percent this year and has risen over the previous six days.
One reason for the market’s recent rise is that some of the biggest obstacles have been pushed aside, said Brian Gendreau, a market strategist at Cetera Financial Group. On Wednesday, the House of Representatives agreed to suspend the federal government’s borrowing limit until May 19, allowing the U.S. to keep paying its bills for another four months.
“Politics is off the table for now and Europe seems like it’s stable. So what’s left? It’s earnings. And aside from Apple it seems like pretty good news,” Gendreau said.
The Nasdaq fell five points to 3,148. A 10 percent drop in Apple, the country’s most valuable company, was enough to pull the technology-heavy index lower. Apple is the largest company of the Nasdaq, making up 10 percent of the index.
Apple sank $53.10 to $460.83. The company predicted that its sales would grow just 7 percent in the current quarter, as iPhone sales peak and the company lacks new products to introduce. That’s a let-down for a company that has regularly posted growth rates above 50 percent.
Netflix jumped 37 percent, or $39.01, to $142.18. Analysts had expected rising expenses to lead the provider of movies and television shows to post a loss in the last three months of 2012. But Netflix said late Wednesday that it turned a profit with the help of 2 million new subscribers.
Microsoft and Starbucks are scheduled to report after the closing bell.
In the market for U.S. government bonds, the yield on the benchmark 10-year Treasury note edged up to 1.86 percent from 1.83 percent late Wednesday.