NEW YORK - Stocks surged higher after another series of 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 unemployment benefits fell last week. And companies including Motorola, Time Warner Cable and Starwood Hotels & Resorts 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, and that allowed investors to focus on the growing signs of healing in the U.S.
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 and lifted hopes that layoffs are slowing.
Dealmaking and strong corporate earnings reports added to the growing optimism. Hewlett-Packard Co. said late Wednesday it is buying smart phone maker Palm Inc. in an all-cash deal worth $1.4 billion. Acquisitions are a sign that the economy is recovering and companies are comfortable spending cash to build their businesses.
"Businesses are in a very strong position financially," said Doug Lockwood, chief investment officer at Cornerstone Wealth Management in Auburn, Ind. Companies have built up big cash reserves that can not only go toward deals, but also eventually to hire back workers, Lockwood said.
On Friday, the government will give its first assessment of overall economic activity during the first quarter when it issues the gross domestic product. Analysts surveyed by Thomson Reuters forecast that the economy grew at an annual rate of 3.4 percent.
The Dow rose 122.05, or 1.1 percent, to 11,167.32, bringing its two-day advance to 175.33. The Standard & Poor's 500 index rose 15.42, or 1.3 percent, to 1,206.78, while the Nasdaq composite index rose 40.19, or 1.6 percent, to 2,511.92.
