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Rallying on Stimulus Hopes: Thursday’s IP Market Recap

Will higher jobless claims and scant inflation mean QE3?


InvestorPlace Market RecapStocks advanced today on investor hopes of further stimulus measures to spur growth. The Labor Department reported today that new filings for unemployment benefits rose yet again. The government’s monthly jobs report, released two weeks ago, also showed a continued slowdown in hiring.

Calls for the Fed to take more stimulative actions have been growing, and investors are counting on the central bank to either launch a third round of bond purchases, known as quantitative easing or QE3, or extend its current policy of Operation Twist, which is set to expire at the end of June.

Those hopes pushed stocks higher, with the Dow up 1.18% at 12,644, while the S&P rose 1.08% to 1,329 and the Nasdaq eased ahead 0.63% to finish at 2,836.

Offsetting the disappointing jobless claims report was the government’s key measure of inflation. The Consumer Price Index showed a 0.3% decline in May, the deepest monthly drop since December 2008. Falling gasoline prices were the biggest factor, plunging 6.8%. Gas started the month at a national average of $3.81 a gallon and slid to $3.62 by the end of May, according to data from the Oil Price Information Service.

On the earnings front, Pier 1 (NYSE:PIR) rose just over 2% on solid first-quarter earnings and a positive outlook, while Smithfield Foods (NYSE:SFD) went the other way on both fronts, disappointing analysts and investors alike. SFD sank 5.6% on the day.

Shares of grocery chain Kroger (NYSE:KR) rose over 6% after it reported a better-than-expected increase in earnings and a $1 billion share buyback program. Krogers’ positive report and outlook for the remainder of the year lifted supermarket chains Supervalue (NYSE:SVU) and Safeway (NYSE:SWY) by 8% and 3%, respectively.

In the discount retail sector, Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR) and Family Dollar (NYSE:FDO) all hit all-time highs today, despite a lack of specific news.

Home Depot (NYSE:HD) and McDonald’s (NYSE:MCD) helped to set the pace for advances among the Dow 30 stocks. HD lowered prices on 3,000 products since debit-swipe fee caps were put in place in October 2011, and the shares rose 2.3% on the news, finishing at $52.16. MCD finished up 2% on the day despite missing sales estimates in Asian markets and being downgraded to hold by Goldman Sachs (NYSE:GS).

Nokia (NYSE:NOK) plunged 15.7% to $2.35 as the company announced massive layoffs and plant closings in an emergency effort to cut costs. The layoffs could number 10,000 jobs globally by the end of 2013, and NOK will close manufacturing plants and suspend research and development projects.

Three Up

  • Cabot Oil (NYSE:COG): Up 8.62% ($2.78) to $35.04
  • Navistar (NYSE:NAV): Up 7.33% ($1.90) to $27.83
  • Dendreon NASDAQ:DNDN): Up 6.19% (44 cents) to $7.55

Three Down

  • Credit Suisse (NYSE:CS): Down 9.43% ($1.87) to $17.97
  • Green Mountain Coffee (NASDAQ:GMCR): Down 5.44% ($1.16) to $20.15
  • Qualcomm (NASDAQ:QCOM): Down 3.65% ($2.15) to $56.49

Marc Bastow is an Assistant Editor at As of this writing he does not hold a position in any of the aforementioned securities.

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