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Stock futures rise after applications for unemployment fall to 5-month low
NEW YORK (AP) ' Stock futures rose sharply Thursday after applications for unemployment benefits fell to a five-month low. The government also reported that the economy grew slightly faster in the spring than previously reported.
Initial unemployment claims fell to a seasonally adjusted 391,000. That's the lowest level since April 2 and also the first time applications have fallen below 400,000 since Aug. 6. The big drop suggests that layoffs are stabilizing. Still, economists say unemployment requests need to consistently fall below 375,000 to indicate job growth.
The Commerce Department also said that the economy grew at a 1.3 percent annual rate in the April-June quarter, up from the 1 percent estimate made a month ago. The improvement reflects modest growth in consumer spending and trade.
Both reports gave investors some confidence about the strength of the economy.
"The economy in the rear-view mirror here ... was growing at a pretty modest pace; not anywhere near what anyone would like, but not troublesome," said Rob Lutts, president and chief investment officer of Cabot Money Management. "This gives us a little more confidence that maybe the economy will muddle through here as we go through all these challenges."
About a half hour before the opening bell, Dow Jones industrial average futures are up 137 points, or 1.3 percent, at 11,113.
Standard & Poor's 500 futures are up 15, or 1.3 percent, at 1,163. Nasdaq 100 futures are up 35, or 1.6 percent, at 2,253.
In Europe, German lawmakers voted to expand the powers of the region's bailout fund. That reassured investors that Europe is working to contain its debt problems.
The measure needs to be approved by all 17 countries that use the euro before it can take effect. It will allow the bailout fund to buy government bonds and lend money to troubled governments before they get to a full-blown crisis. Finland approved it on Wednesday.
Concerns about Europe have roiled the financial markets since late July. Analysts say investors are reacting to every bit of news from the region, which has contributed to volatility in stocks.
Case in point: Stocks rose earlier this week on hopes that Europe was moving closer to resolving its debt problems. The Dow soared 272 points on Monday, its fourth-largest increase this year, and another 147 points on Tuesday. By Wednesday, a three-day winning streak came to an end on more uncertainties about Europe's debt. The Dow fell 180 points.
In corporate news, Advanced Micro Devices Inc. fell 9 percent in premarket trading Thursday after the company cut its revenue and earnings forecast for the third quarter, saying it was having problems getting its chips made.
Wheel and tire maker Titan International rose 3 percent ahead of the opening. The company boosted its revenue forecast for the year and said it is in a "great position to grow."