NEW YORK (AP) — Encouraging economic reports sent stocks slightly higher in afternoon trading Thursday. The number of people applying for unemployment benefits dropped last week to the lowest level since April 2008, the latest sign that the job market is healing.
Applications for unemployment fell for the third week in a row. The Conference Board also reported that its measure of future economic activity had a big increase last month. It was the second straight gain, signaling that the U.S. economy was picking up speed and the risk of another recession was fading.
"Today, Main Street is what matters because Main Street makes up 71 percent of the economy," said Quincy Krosby, chief market strategist for Prudential Securities. "You can't argue with the fact that the cost of gas has come down, which puts more money in the pockets of consumers to spend, and so things are starting to tick up."
Krosby noted that the latest data showed that shoppers were opening up their wallets to spend during the holidays. However, she said the economy needs to grow at a faster pace than 2 percent to be able to survive any shocks caused by the European debt crisis or a sharp slowdown in China's economy in 2012.
The government lowered its estimate of U.S. economic growth in the July-September quarter to an annual rate of 1.8 percent from 2 percent. That was still the fastest growth this year, up from 1.3 percent in the April-June quarter.
The Dow Jones industrial average rose 49 points, or 0.4 percent, to 12,156 as of 2:45 p.m. Eastern. The S&P 500 index rose 9 points, 0.8 percent, to 1,253. The Nasdaq was up 20, or 0.8 percent, at 2,598.
Economists think the improving job market, strong holiday shopping, and cheaper gas prices will leave consumers with more money to spend. That would get the economy growing at an annual rate of more than 3 percent in the final three months of this year, which would be the fastest pace since 3.8 percent growth in the spring of 2010.
Banks and technology stocks were the largest gainers, while utilities and consumer goods companies traded lower. Citigroup Inc. stock was up 6 percent to $27.67, while JPMorgan Chase & Co. gained 3 percent to $33.43. Juniper Networks Inc. rose 7 percent to $20.76.
In other corporate news:
— Mead Johnson Nutrition Co. plummeted 10 percent on news that Wal-Mart Stores Inc. pulled a batch of its powdered infant formula from more than 3,000 of its stores nationwide. A newborn Missouri boy was fed a batch of the Enfamil Newborn powder made by Mead and died from what preliminary tests indicate was a rare bacterial infection. So far, there is no known link between the death and the formula and the government has not ordered a recall of Enfamil.
— Tibco Software Inc. jumped 9 percent after the business software maker reported a 20 percent increase in revenue and net income that was far ahead than what Wall Street analysts were expecting.
— Bed, Bath & Beyond Inc. slid 6 percent after the retailer warned investors that its fourth-quarter earnings might be lower than analysts had expected. Third-quarter sales also fell below analysts' expectations.