Traders Shrug Off Jobs Data, Drive Stocks Higher

By PETER A. MCKAY and GEOFFREY ROGOW Stocks rallied on Thursday, snapping a four-day losing streak despite signs that the job market remains in dismal health. The Dow Jones Industrial Average jumped 172.54 points, or 2.1%, to 8472.40, helped by gains for Alcoa, American Express, Home Depot, Merck and Pfizer, all of which rose more than 3.5%. Twenty-nine of the gauge's 30 components ended higher. Other stock indexes saw equally strong gains. The S&P 500-stock index leapt 19.33 points, or 2.2%, to 920.27, and the Nasdaq Composite Index rose 37.20 points, or 2.1%, to 1829.54. The market's gains came despite data showing that the ranks of the jobless are still growing. A weekly report from the Labor Department said that the number of workers filing initial claims for unemployment benefits increased 15,000 to 627,000 in the week ended June 20. The number of continuing claims, or those drawn by workers for more than one week in the week ended June 13, climbed 29,000 to 6,738,000, after plunging 126,000 the previous week. Companies are continuing to make hefty cuts to their payrolls. Kimberly-Clark said Thursday that it plans to cut about 1,600 jobs, primarily from its salaried, non-production work force. Still, shares of the consumer-products giant added 1.9% amid a broad rally in consumer stocks. Bed Bath & Beyond leapt 9.5% after its earnings topped analysts' expectations. Matthew Kaufler, portfolio manager at Federated Clover Investment Advisors in Rochester, N.Y., said the market's reaction Bed Bath & Beyond's report is emblematic of a recent eagerness for consolidation in the retail sector, making some stores attractive even though consumers remain on shaky ground. Mr. Kaufler said Bed Bath & Beyond seemed to benefit from the recent bankruptcy of rival Linens 'n Things. Rising jobless claims did little to dampen the markets, where traders instead focused on bright spots in the housing sector. Simon Constable reports after the bell. "Where you see capacity shrinking in an industry because competition is going away, there's always potential for higher earnings leverage," or fast-paced growth coming out of a recession, said Mr. Kaufler. "It's one of the things we're always looking for, and there's a good amount of it in some of the retailers right now." Investors also packed into housing stocks after Lennar posted a wider second-quarter loss but reported a 63% jump in orders -- a trend that traders hungry for positive news on the housing sector took as a signal to buy. Lennar shares rose 18% and the S&P Homebuilders exchange-traded fund soared by 5.1%. In addition to the focus on earnings reports, the quarter's end has also brought some window dressing, a benefit to the quarter's best performers -- large banks and consumer companies. Treasury prices rose after the U.S. Treasury conducted a successful auction of $27 billion in notes, the last installment of $104 billion in such sales this week. The two-year note was recently up 6/32 to yield 1.125%. The 10-year note rose 1-10/32 to yield 3.532%. Yields have fallen sharply since climbing near to 4% several weeks ago. Write to Peter A. McKay at peter.mckay@wsj.com and Geoffrey Rogow at geoffrey.rogow@dowjones.com