News on earnings, job claims lifts stocks

NEW YORK - Stocks surged higher after upbeat earnings reports and a reading on unemployment provided more evidence of an improving economy.

The Dow Jones industrials rose 122 points Thursday after the Labor Department said initial claims for jobless benefits fell last week. And companies including Motorola Inc., Time Warner Cable Inc., and Starwood Hotels & Resorts Worldwide Inc. reported earnings that topped analysts' forecasts.

It was the market's second straight winning day after a plunge Tuesday that took the Dow down 213. Greece's debt problems, one of the triggers for that slide, appeared less dire Wednesday and Thursday. That allowed investors to focus on the growing signs of healing in the United States.

The Labor Department said first-time claims dipped to 448,000, slightly above analysts' forecast of 445,000, according to Thomson Reuters. It was the second weekly drop.

Deal-making and reports of strong corporate earnings added to the growing optimism.

Hewlett-Packard Co. said late Wednesday that it was buying smartphone-maker Palm Inc. in an all-cash deal worth $1.4 billion. Acquisitions are a sign that the economy is recovering and that companies are comfortable spending cash to build their businesses.

On Friday, the government will give its first assessment of overall economic activity during the first quarter when it reports on the gross domestic product.

The Dow rose 122.05, or 1.10 percent, to 11,167.32, bringing its two-day advance to 175.33. The Standard & Poor's 500 index rose 15.42, or 1.29 percent, to 1,206.78, while the Nasdaq composite index rose 40.19, or 1.63 percent, to 2,511.92.

European stock markets rose Thursday after two days of steep declines. On Wednesday, Spain became the third European country this week to see its debt rating slashed by Standard & Poor's, after Greece and Portugal. There are concerns that debt problems will spread across the continent and slow a global economic recovery.

Some analysts said investors had been overreacting to the situation in Europe. But analysts also acknowledged that the market was due for a pullback.

Earnings were a primary driver of stocks Thursday.

Starwood Hotels & Resorts' profit jumped sharply as more people checked into its hotels, including the Sheraton, W, and Westin. Drugmaker Bristol-Myers Squibb Co. also reported stronger earnings.

Dow component Exxon Mobil Corp.'s profit rose during the quarter, but it fell short of expectations. Exxon Mobil shares fell 53 cents to close at $68.66.

Shares of Starwood Hotels & Resorts rose $3.02, or 5.67 percent, to $56.29, while Bristol-Myers Squibb shares rose $1.03, or 4.23 percent, to $25.37. Motorola shares jumped 24 cents, or 3.47 percent, to $7.16, and shares of Time Warner Cable rose $4.02, or 7.57 percent, to $57.15. Hewlett-Packard shares fell 40 cents to close at $52.88, while Palm shares surged $1.21, or 26.13 percent, to $5.84.