Major Indexes Surge in Late Trading (Market Update)

Published Sept. 3, 2009 at 4:00 a.m.

News at a Glance

• Abercrombie Crunch: Retailer posts weak results.
• Jobless Claims: New weekly filings drop by 4,000.
• Costco Sales: Same-store figures drop 2% for August.
• Meats Merger: Brazil's JBS to swallow Pilgrim's Pride.

The Lowdown

Stocks traded in a tight range until the end of the Thursday, session, with low volume ahead of tomorrow's employment report.

The Dow Jones Industrial Average closed up 64 at 9345. The Nasdaq rose 17 to 1983, and the S&P 500 gained 8 to 1003. Stocks fell in the previous four straight sessions, the longest losing streak for blue chips since June. Investors are concerned that a strong summer market rally may be due for a correction as new data challenge some of the rosier recovery scenarios traders embraced during stocks' run-up.

The job market remains weak. Initial claims for jobless benefits fell 4,000 to 570,000 in the week ended Aug. 29, the Labor Department said in its weekly report. But in a sign that the jobless continue to struggle to find work, claims lasting more than one week rose 92,000 to 6,234,000.

A report on monthly nonfarm payrolls is due on Friday. Economists expect the pace of job losses to slow, but markets will be on guard against any unexpected jump in the unemployment rate.

Meanwhile, monthly chain-store sales results out on Thursday suggested many consumers remain reluctant to splurge. Teen apparel retailers like Abercrombie & Fitch (ANF) reported grim results, a troubling sign for the critical back-to-school shopping season. And though sales at some retailers slumped less than analysts forecast, demand generally remains weak. Abercrombie shares fell 4%.

Despite such signs, the Organization for Economic Cooperation and Development said that the recovery from the global recession is likely to arrive earlier than had been expected but that the pace of activity will remain weak well into next year. It expects G7 economies to contract 3.7% this year, better than the 4.1% contraction the group previously forecast.

Oil futures traded on the Nymex stayed mostly flat. As of 4:03 p.m., crude was up 18 cents at $68.14 a barrel in afternoon trading.

Corporate News

• Target (TGT) said August same-store sales fell 2.9%, less than the 5.1% anticipated by analysts. Shares of the discount retailing giant gained 2.9%.
• Costco Wholesale (COST) reported that same-store sales dropped 2%, better than Street estimates of about 6%.
• Limited Brands (LTD) reported a fall of 4%, better than earlier forecasts.
• Teen clothing retailer Abercrombie & Fitch (ANF) reported an August same-store sales drop of 29% from the same month a year ago. Analysts, on average, expected a decline of 23.9%. 

The Economy

• The Organization for Economic Cooperation and Development said global recovery is moving fast than expected, but "governments will need to continue to stimulate their economies as rising unemployment and weak housing markets continue to dampen private demand. The current exceptionally low interest rates should remain in force for the time being."  REPORT
• The Energy Information Administration (EIA) reported that natural gas inventories increased by 65 billion cubic feet, pushing prices down slightly. REPORT  
• The Governing Council of the European Central Bank decided to leave the benchmark interest rate in the euro zone unchanged at 1%. REPORT

Dow Jones Newswires contributed to this report.

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