NEW YORK — Signs of progress in Europe’s debt crisis and an unexpected drop in unemployment claims pushed stocks higher Thursday, a day after the stock market took its worst fall since the summer.
Greece named a new prime minister Thursday, and Italy borrowed $6.8 billion at lower interest rates than analysts expected. Italy’s benchmark rate dropped below 7 percent after spiking above that level Wednesday.
Investors were also relieved by talk that economist Mario Monti is likely to replace Premier Silvio Berlusconi, who was seen as an obstacle to meaningful economic reforms. Italy’s president pledged that Berlusconi will step down soon.
The Dow Jones industrial average rose 112.85 points, or 1 percent, to close at 11,893.79.
It plunged 389 points Wednesday after Italy’s borrowing rates soared and talks broke down in Greece to name a prime minister. Traders have been concerned that debt troubles in Italy and Greece could spread to the U.S. and lead to a global financial crisis.
Peter Cardillo, chief market economist at Rockwell Global Capital, called the drop in unemployment claims and the news from Europe encouraging. “It’s got the markets on the cheerful side,” he said.
The Standard & Poor’s 500 index gained 10.60, or 0.9 percent, to 1,239.70. The Nasdaq rose 3.50 points, or 0.1 percent, to 2,625.15. Apple Inc. fell 2.5 percent, dragging down the Nasdaq.
The Labor Department reported early Thursday that the number of people applying for unemployment benefits fell to 390,000 last week. That figure and the four-week average were the lowest since April. The drop is a sign the job market might be improving.
There were also signs of progress in Greece, the other focus of Europe’s debt crisis. A day after a breakdown in power-sharing talks in Greece jolted financial markets, senior banker Lucas Papademos was named prime minister of a new coalition government. Papademos, a former vice president at the European Central Bank, is tasked with passing austerity measures being demanded by international lenders.
