NEW YORK — Traders are betting that an improving economy will reward banks and energy companies.
Stocks rose for the fifth time in six days Thursday after analysts raised their ratings on banks and oil prices rose again, making energy firms look increasingly attractive. Investors were also willing to take more chances on stocks after the government reported that the number of workers continuing to receive unemployment benefits unexpectedly fell for the first time in 20 weeks.
The drop in unemployment rolls gave investors another bit of hope, though analysts cautioned that the economy still has not found stable footing. The idea that the economy is halting its slide has driven a powerful rally that has lifted the Standard & Poor’s 500 index 39.8 percent in three months.
The data arrived a day ahead of the government’s monthly tally of job losses — often seen as the most important report on the economic calendar. The unemployment rate stood at a 25-year high of 8.9 percent in April, and economists expect it will rise to 9.2 percent when the May report is issued today.
Investors are looking for any sign that unemployment is ebbing because that could help shore up consumer spending, retail sales and the housing market.
“Things seem to have stabilized, and people are hunting for any sort of information they can get to determine the next move in the market and the economy,” said Jim Sinegal, equity analyst at Morningstar in Chicago.
The Dow Jones industrial average rose 74.96, or 0.9 percent, to 8,750.24. The broader Standard & Poor’s 500 rose 10.70, or 1.2 percent, to 942.46, and the Nasdaq composite rose 24.10, or 1.3 percent, to 1,850.02.
The S&P and Nasdaq are at new highs for the year, and both are showing gains for 2009. The Dow is down only 26 points for the year after having been in the red since early January.
The market’s surge this spring since hitting 12-year lows March 9 has been driven by better-than-expected data. But investors are looking for clearer indications that the economy is improving.
“If we’re on the cusp of a recovery and a convincing recovery, then the stock market makes all the sense in the world,” said Michael Darda, an economist with MKM Partners in Greenwich, Conn. “If it turns out there is no recovery until next year, then the market could run into some trouble.”
