Dow up ahead of jobs report

NEW YORK - Investors' cautious optimism about the job market gave stocks a modest lift yesterday, one day before the government's report on December employment.

Stocks closed mostly higher after many retailers issued upbeat figures on holiday sales and the Labor Department reported a leveling off of the number of newly laid-off workers applying for unemployment benefits.

The Dow Jones industrial average and the Standard & Poor's 500 index closed at 15-month highs, while the Nasdaq composite index edged lower.

Stuart Schweitzer, global markets strategist at JPMorgan Private Bank, of New York, said markets had been in a holding pattern as traders looked to today's jobs report from the Labor Department. Analysts are expecting job losses will shrink from the 11,000 lost in November; some economists even expect the economy to add jobs.

"Everyone is waiting for the fireworks," Schweitzer said.

The government yesterday reported a slight increase in claims for unemployment benefits, though the increase was less than expected.

Meanwhile, reports of upbeat December retail sales and increased forecasts lifted some retailers.

Sears Holdings Corp., which operates Kmart and Sears, eked out a small gain and offered a fourth-quarter forecast that was sharply above analysts' estimates. Others, including Macy's Inc. and Limited Brands Inc., boosted their profit expectations.

The Dow rose 33.18, or 0.31 percent, to 10,606.86. The broader S&P 500 index rose 4.55, or 0.40 percent, to 1,141.69. It was the highest close for both indexes since Oct. 1, 2008.

The Nasdaq fell 1.04, or 0.05 percent, to 2,300.05.

The dollar rose, and gold fell. A gain in the dollar weighs on commodity prices by making them more expensive for overseas buyers. That hurts energy and materials companies.

Crude oil fell 52 cents to close at $82.66 a barrel on the New York Mercantile Exchange.

Among retailers, shares of Sears jumped $10.31, or 11.60 percent, to $99.18, while Macy's shares rose 39 cents, or 2.28 percent, to $17.49. Shares of Limited slipped 31 cents to close at $18.76.

Home builder Lennar Corp. said orders rose during its fiscal fourth quarter for the first time in more than three years. Buyers were taking advantage of lower prices and federal tax credits. The company also reported a profit as it benefited from an income tax adjustment. Its shares rose $1.76, or 12.85 percent, to $15.46.

The Russell 2000 index of smaller companies rose 4.02, or 0.63 percent, to 641.97.

Some overseas markets fell after China took steps to limit lending and prevent its economy from overheating. Traders fear the moves could affect economic growth around the world.

Britain's FTSE 100 fell 0.1 percent, Germany's DAX index lost 0.3 percent, and France's CAC-40 rose 0.2 percent. Japan's Nikkei stock average fell 0.5 percent.