Jobless claims drop sends stocks higher

NEW YORK (AP) — A small drop in unemployment claims and a higher profit forecast by FedEx Corp. helped push stocks to two-year highs Thursday.

The Labor Department said first-time claims for unemployment benefits fell last week to 420,000, the third drop in four weeks. The four-week average of claims also slid for the sixth straight week, reaching the lowest level since July 2008. That was before Lehman Brothers collapsed and markets seized up at the height of the financial crisis.

Separately, the Commerce Department said housing starts rose slightly last month, reversing a two-month decline.

Card companies fell sharply after the Federal Reserve proposed as 12-cent cap on the fees that merchants pay every time a customer uses a debit card. Merchants now pay a fee that ranges between 1 to 2 percent of each transaction.

The proposal could cut revenues for major banks and card networks like Visa Inc. and MasterCard Inc. Visa fell 12.7 percent to $67.19. MasterCard fell 10.3 percent to $223.49.

FedEx Corp. rose 1.9 percent to $94.22 after the company raised its earnings predictions for next year because businesses and consumers are shipping more packages. Traders took that as a sign the economy is improving.

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