Stocks rose Thursday after mostly falling for three days as traders scooped up beaten-down financial and retail stocks. The buying was subdued after a worse-than-expected weekly unemployment report added to concerns that the economic recovery might not come as quickly as hoped. The advance came as the market grappled with another reminder of the strained job market. The Labor Department’s weekly data showed more workers filing for unemployment benefits. New claims jumped to 637,000, above what economists had forecast. Some traders had been expecting an increase in weekly unemployment claims because of expected shutdowns among the nation’s automakers. The Dow rose 46.43, or 0.6 %, to 8,331.32. The S&P 500 index rose 9.15, or 1 %, to 893.07, while the Nasdaq rose 25.02, or 1.5 %, to 1,689.21.

Morning Outlook

Stocks soared forward overnight in Asia where investors were encouraged by data showing Japanese machinery orders in March fell less than expected. Japan’s Nikkei 225 stock average gained 171.29 points, or 1.9 %, to 9,265.02, and Hong Kong’s Hang Seng added 249.01, or 1.5 %, to 16,790.70.
The economy of the 16 countries that use the euro shrank by a massive 2.5 % in the first quarter; far more than the consensus expectation of 2%. This is the 4th consecutive quarter the euro zone has seen a decline in GDP.

Germany’s economy shrank 3.8 % as demand for its high value goods, such as cars and machinery diminished. Germany’s DAX was up 0.4 % at 4,755.11. French GDP declined by 1.2 %, however the CAC 40 rose 0.8 % at 3,182.35.

Investors are awaiting premarket data which are expected to show that industrial production fell in April but at the slowest pace in six months. However Wall Street retreated heading into the last trading day of the week as Dow Jones industrial average futures fell 37, or 0.5 %, to 8,249. Standard & Poor’s 500 index futures fell 5.80, or 0.7 %, to 883.70, while Nasdaq 100 index futures fell 8.75, or 0.7 %, to 1,345.

On the Corporate Front

According to a bankruptcy court filing, Chrysler LLC wants to eliminate roughly a quarter of its 3,200 U.S. dealerships by early next month. General Motors Corp. says it is notifying 1,100 dealers that it will not renew their franchise agreements when they expire at the end of September of 2010. About 187,000 jobs could be lost from the closing of GM and Chrysler dealerships.

The Treasury Department has agreed to extend billions in taxpayer funds to six major life insurers to sure up their capital positions. Although the amount of TARP money received by each is not known, The Hartford Financial Services Group, Lincoln Financial Group, Allstate Corp., Ameriprise Financial Inc., Principal Financial Group Inc. and Prudential Financial Inc. are insurers who received preliminary investment approval.

Economic Calendar

8:30 AM
Consumer Price Index (CPI): Measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation. The consensus is for no change month over month from March to April, with a 0.1% gain excluding food and energy.

9:15 AM
Industrial Production: The index of industrial production measures the physical output of the nation’s factories, mines and utilities. The consensus is for a production decline of 0.6% for the month of April as the manufacturing component continues to lag; this would be the 6th straight drop, after declining 1.5% in March.

9:55 AM
Consumer Sentiment: Consumer sentiment is directly related to the strength of consumer spending, by questioning 500 households each month on their financial conditions and attitudes about the economy. The consensus reading for May is 67, up from April’s reading of 65.1; however economic optimism may dissipate as the job market continues to decline.