The Labor Department said more people applied for unemployment benefits last week, the first increase in three weeks. The number of people seeking benefits rose by 10,000 to 424,000, more than analysts were expecting.
Applications are above the 375,000 level that is consistent with sustainable job growth. Applications peaked at 659,000 during the recession. Employers stepped up hiring this spring, but some economists worry that rising applications for unemployment benefits indicate hiring is slowing.
The Commerce Department said the economy grew at a sluggish 1.8 percent annual rate in the January-to-March quarter as surging gasoline prices and sharp cuts in government spending overshadowed strong corporate earnings. Consumer spending grew at just half the rate of the previous quarter, less than previously estimated. A surge in imports widened the United States trade deficit.
Economists believe the economy is doing only slightly better in the current April-to-June quarter. Consumers remain squeezed by gas prices near $4 a gallon and renewed threats from Europe’s debt crisis.
In early trading, the Dow Jones industrial average fell 58.54 points, or 0.5 percent. The Standard Poor 500-stock index fell 4.07 points, or 0.3 percent. The Nasdaq composite index was flat.
The weak economic news drew investors toward safer assets. The yield on the 10-year Treasury note fell to 3.11 percent, near its lowest level of the year. It was trading at 3.15 percent shortly before the economic reports came out. Bond yields fall when their prices rise.
Concerns about the European debt crisis continue to weigh on markets. Stocks fell for three days before Wednesday’s gains, which came as higher oil prices lifted energy stocks.
Greece’s government and opposition party failed late Tuesday to reach agreement on how to pare the country’s debts, adding to the uncertainty surrounding Greece’s financial future. Many analysts believe Greece will eventually have to restructure its debt, possibly by extending interest payments or lowering interest rates.
Analysts are also concerned about how much of an impact the supply disruptions stemming from the March earthquake and tsunami in Japan will have on manufacturing in the United States, especially on factories making cars and electronic products that depend on component parts from Japan.
Some analysts think Japan’s supply chain problems could shave as much as one-half a percentage point from growth in the April-to -June period.
In the morning, the Energy Information Administration is to release its weekly report on the nation’s crude oil supplies for the week ended May 20. Analysts expect a 1.6 million-barrel decrease, according to a survey by Platts, the energy information arm of McGraw-Hill. They expect gasoline supplies to rise by 750,000 barrels, distillate stocks to grow by 500,000 barrels and refinery utilization to increase 0.4 percentage point to 83.6 percent of capacity.
On Wednesday, the Dow Jones industrial average rose 38.45 points, or 0.3 percent, to close at 12,394.66. The Standard Poor index rose 4.19, or 0.3 percent, to 1,320.47. The Nasdaq rose 15.22, or 0.6 percent, to 2,761.38.
Article source: http://feeds.nytimes.com/click.phdo?i=9d863512881d24c8b1ef297af2fb87fb
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