Wall Street climbs after initial claims, retail sales

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks edged higher on Thursday, putting the S&P 500 on track for a second day of gains, following better-than-expected data on retail sales and the labor market, though worries about Ukraine and the health of China's economy curbed the advance.

Weekly initial jobless claims fell 9,000 to a seasonally adjusted 315,000, marking a fresh three-month low and better than a forecast for 330,000 new claims.

Retail sales for February rose 0.3 percent, slightly more than the 0.2 percent estimated and ended two straight months of declines, although the prior month was revised lower.

In addition, import prices increased 0.9 percent last month, the biggest rise since February last year, with little sign of a broad pick-up in imported inflation.

 

Investors have discounted many economic numbers that have fallen short of expectations recently, attributing the weakness to a harsh winter across much of the country. Economic activity, evidenced by such data as retail sales, is expected to improve as the weather warms.

Still, with the benchmark S&P index near record highs, investors may be looking for evidence of stronger economic progress to justify further gains.

"It's been kind of a recurring theme all year - an improving U.S. economy is already discounted in the market and the numbers aren't so good as to say it's a blistering improvement," said Stephen Massocca, managing director, at Wedbush Equity Management LLC in San Francisco.

"And these hot spots are still of concern to people, the Ukraine and China being wobbly."

China's economy slowed markedly in the first two months of the year, as growth in investment, retail sales and factory output all fell to multi-year lows.

Tensions in Ukraine continued to flare. Germany's Angela Merkel warned Moscow it risked "massive" political and economic damage if it refused to change course on Ukraine, saying Western leaders were ready to impose sanctions on Russia if necessary.

Russia said it had started military exercises near the border with Ukraine, in what is likely to be seen as a show of force in the standoff with the West over the Crimea peninsula.

The Dow Jones industrial average rose 33.26 points, or 0.2 percent, to 16,373.34, the S&P 500 gained 2.45 points, or 0.13 percent, to 1,870.65 and the Nasdaq Composite added 4.799 points, or 0.11 percent, to 4,328.13.

In the last piece of economic data on Thursday, business inventories rose 0.4 percent, in line with expectations, but a drop in sales meant it was now taking the longest time since late 2009 to move goods from shelves.

Amazon.com Inc rose 2.3 percent to $379.01 as the best performer on the S&P 500 after the Internet retailer told customers on Thursday that the annual membership fee for its Prime shipping and media streaming service would go up to $99 from $79 next week.

J.C. Penney Co Inc gained 1.1 percent to $9.03. The department store chain is about to undo the centerpiece of former Chief Executive Officer Ron Johnson's failed vision to take the retailer upmarket, relaunching its home goods sections.

Dollar General Corp lost 2 percent to $58.08 after the discount retailer posted lower-than-expected sales for the holiday quarter.

Venaxis Inc surged 26.2 percent to $3.42 after the company said its appendicitis test correctly predicted results in 97 percent of patients in a clinical trial.

(Editing by Bernadette Baum)