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On Wall Street, stocks rise on job market news

By Shobhana Chandra
Bloomberg News

WASHINGTON Fewer Americans than projected filed applications for unemployment benefits last week, indicating the labor market is improving.

Jobless claims declined by 42,000 to 338,000 in the week ended Dec. 21, a federal Labor Department report showed Thursday. The drop was far bigger than economists expected and an indication that fewer people lost jobs, The Associated Press reported. Continuing claims rose.

The AP reported traders were encouraged by the latest sign that the U.S. job market is improving. Trading volume was very low, however, as most portfolio managers have closed out their positions for the year.

The yield on the 10-year Treasury note, a benchmark for many kinds of loans, briefly crossed above the psychologically important 3 percent mark. It hasn’t been that high since September.

The Dow Jones industrial average rose 122.33 points, or 0.8 percent, to 16,479.88. It was the 50th record high close for the Dow this year. The index is up 25.8 percent so far in 2013, on pace to have its best year since 1996.

The Standard & Poor’s 500 index rose 8.70 points, or 0.5 percent, to 1,842.02 and the Nasdaq composite was up 11.76 points, or 0.3 percent, to 4,167.18. With Thursday’s gains, the S&P 500 is up 29.2 percent for the year, or 31.3 percent when dividends are included. The S&P is on track for its best year since 1997, according to the AP.

Other data show a pickup in employment helped boost personal spending, which accounts for almost 70 percent of the economy.

“Companies have been holding on to workers and are now a getting a bit more active on hiring,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Conn., who projected 340,000 claims.

The number of people continuing to receive jobless benefits increased by 46,000 to 2.92 million in the week ended Dec. 14, the highest since August. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are collecting emergency and extended payments decreased by about 40,700 to 1.33 million in the week ended Dec. 7.

Employment at U.S. passenger airlines showed signs of stabilizing, according to the Transportation Department’s Bureau of Transportation Statistics, spurring more competition for jobs. Southwest Airlines, which last hired flight attendants from outside the company in 2011, received applications at a rate of 80 a minute, amassing 10,000 resumes for 750 openings.

“It was the first time we did that in a while, and of course anytime we do it, it’s like opening up the floodgates,” Chief Executive Officer Gary Kelly told employees in a weekly recorded message.

Payrolls expanded by 203,000 workers in November after a 200,000 gain in October, and the jobless rate fell to a five-year low of 7 percent, according to Labor Department figures.

The improvement in the economy and job market helps explain why the Federal Reserve decided to begin reducing stimulus. The central bank on Dec. 18 said it will trim monthly bond purchases to $75 billion from $85 billion starting in January.

Fed officials also raised their assessment of the outlook for the job market and predicted the unemployment rate will fall as low as 6.3 percent by the end of next year, compared with a September projection of 6.4 to 6.8 percent. The Associated Press contributed.

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