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 36 points, or 0.3 percent, to 12,336 in morning trading. The index fell the previous four days over worries that the U.S. might default on its debt next week if Congress doesn't raise the country's borrowing limit.
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The Standard & Poor's 500 rose 5, or 0.4 percent, to 1,310. The Nasdaq composite index rose 16, or 0.6 percent, to 2,781.
House Republicans plan to vote Thursday on a new plan to avoid a default. The bill faces steep opposition from Senate Democrats, and it's far from certain that it will pass. Just five days remain until the U.S. government won't have enough money to cover all its bills.
Even if the U.S. doesn't default, investors are becoming worried that the country might lose its triple-A credit rating. That would raise interest rates on all kinds of loans and 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."
Exxon Mobil Corp. fell 1.7 percent, the most of the 30 companies that make up the Dow average, after its earnings fell below analysts' estimates. 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.
The Dow fell nearly 200 points Wednesday, its biggest one-day drop since early June. It is headed for its worst weekly decline since August 2010. The Dow is also about 3.7 percent below the 2011 high it reached on April 29.
If the debt issue is not resolved, analysts worry that stocks could fall as much as they did in 2008, when the House of Representatives voted down a bill to create the Troubled Asset Relief Program. The Dow plunged 778 points on Sept. 29 after the bill failed. Four days later, Congress had an about face and passed the TARP bill. President George W. Bush quickly signed it into law, and the Dow then jumped as much as 946 points in a week.
Earnings results were mixed. DuPont Co. rose 2.4 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 17 percent, the most in the S&P 500 index, after the website content delivery company's earnings were lower than analysts had expected. Sprint Nextel Corp. fell 16.7 percent. The nation's No. 3 wireless carrier said its loss widened in the second quarter, in part, because of a tax expense and losses to its investments.
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