Jobs report pushes stocks up despite debt worries

NEW YORK (AP) — An unexpected decrease in unemployment claims sent stocks slightly higher Thursday even as a stalemate continued in Washington over how to avoid a U.S. debt default.



The government said first-time applications for unemployment benefits fell to 398,000 last week, the lowest level in four months. That's a sign that employers are laying off fewer workers.



The Dow Jones industrial average rose 51 points, or 0.4 percent, at 12,354 in afternoon trading. The index fell over the previous four days over worries that the U.S. might default on its debt as soon as next week if Congress doesn't raise the country's borrowing limit.



The Standard & Poor's 500 rose 11, or 0.8 percent, to 1,316. The Nasdaq composite index rose 33, or 1.2 percent, to 2,798.



The House of Representatives is expected to vote later Thursday on a new plan to avoid a default. Speaker John Boehner pleaded with fellow Republicans in a closed-door meeting to support the proposal, which calls for cutting $900 billion from the deficit over the next decade.



The bill still faces opposition from Senate Democrats and the White House, but the vote could bring President Barack Obama and Congress a step closer to resolving the standoff. The Treasury Department says the government won't have enough money to cover all its bills after next Tuesday.



Even if the U.S. doesn't default, investors worry that the country might lose its triple-A credit rating. That could raise interest rates and possibly slow down the U.S. economy, which is still recovering from the worst recession in decades.



"We're running out of time," said Phil Dow, director of equity strategy at RBC Wealth Management in Minneapolis. "It's getting scary."



Markets were far less volatile than Wednesday, when the Dow had its biggest one-day drop since early June. The price of gold, which tends to rise when investors are fearful of economic disruptions, fell 10 cents to $1,615.20 in afternoon trading. It's still up 13.6 percent this year.



The dollar rose against other currencies, as did Treasury prices. The dollar and Treasurys would likely fall if investors worry that a default is imminent.



Utility and telecommunications stocks were the only two of the 10 company groups in the S&P 500 index to fall. That suggested investors were becoming more comfortable taking on risk since those stocks tend to be less volatile than the rest of the market.



Bristol-Myers Squibb Co. rose 2.4 percent after the drugmaker reported earnings that were better than analysts anticipated. The company also raised its earnings forecast for 2011. Exxon Mobil Corp. fell 1.1 percent, the most of the 30 companies that make up the Dow average, after its earnings came in below analysts' estimates.



LSI Corp., which makes storage and networking chips, rose 13.7 percent, the most in the S&P 500, after the company issued a forecast for third-quarter revenue that was higher than expected.



Other earnings results were mixed. DuPont Co. rose 1.9 percent after the chemical maker said its earnings increased 5 percent on higher revenue. The company also raised its earnings outlook for the year.



Akamai Technologies Inc. fell 19.3 percent, the most in the S&P 500 index, after the online streaming company's earnings were lower than analysts had expected. Sprint Nextel Corp. fell 15.9 percent. The nation's No. 3 wireless carrier said its loss widened in the second quarter, in part, because of a tax expense and investment losses.