Stocks rally on job report

NEW YORK (AP) — Stocks extended their September rally Thursday after more encouraging news on the job market.

The Dow Jones industrial average fell from its morning highs, but was still up 8 points in afternoon trading after the Labor Department said first-time claims for unemployment benefits fell last week to the lowest level in two months.

A report that European banking giant Deutsche Bank AG is considering raising new money through a stock sale dampened the upbeat mood.

The jobs report came in much better than analysts had expected and added to other positive signals on the economy, including a pickup in job creation for August reported last week. Treasury prices and the dollar fell as investors stepped up their appetite for risk.

“The employment report is still the king of kings,” said Edwin Denson, head of market strategy at Singer Partners LLC. “The labor market is still the indicator, that if it’s positive, would give people the most comfort.”

Unemployment claims have still not fallen enough to suggest that widespread hiring is around the corner, but investors have taken solace in recent employment news that suggest the economy will continue to grow slowly during the rest of the year. Traders concerned about the potential for the economy to slide back into recession drove stocks lower through most of August.

“All we need is slightly good news ... relative to expectations and at this point expectations are relatively poor,” said Tyler Vernon, principal and portfolio manager at Biltmore Capital Advisors.

The Dow rose 8.85, or 0.1 percent, to 10,395.94 in afternoon trading. The Dow had risen as much as 90 points and climbed into positive territory for the year earlier in the day.

Stocks have rallied since the beginning of September on the improving outlook for the economy, and are on track to have their sixth day of gains out of the last seven.

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