Stocks open lower after rise in jobless claims

NEW YORK (AP) — An unexpected rise in jobless claims is causing investors to sell again.

A day after the Federal Reserve expressed confidence in the economy, the government said new jobless claims rose by 15,000 to 627,000 last week. The market had been expecting a decline.

Unemployment has been one of the most closely watched gauges of the economy throughout the recession as it affects many drivers of economic growth — most importantly, consumer spending.

Uncertainty about when the economy will turn around, and how fast it will grow when it finally does, have made for a rocky market this month. The Dow Jones industrial average remains up 26.8 percent from its 12-year low hit on March 9, but is down nearly 500 points, or 5.7 percent, from the five-month high it reached on June 12.

Rising unemployment claims shouldn’t be surprising to investors, because unemployment usually continues to increase even when the economy is improving, said Arthur Hogan, chief market analyst at Jefferies & Co. But the jump in claims was nevertheless leading to some selling on Thursday, he said.

“Investors are really on guard here. We’re at a juncture where investors don’t know what the next 10 percent move is — whether it’s up or down,” Hogan said.

In the first half hour of trading, the Dow fell 22.60, or 0.3 percent, to 8,277.26. The Standard & Poor’s 500 index fell 4.67, or 0.5 percent, to 896.27, and the Nasdaq composite index fell 13.16, or 0.7 percent, to 1,779.18.

The modest decline in stocks came after the Fed said Wednesday that “sustainable economic growth” should gradually resume, and inflation will “remain subdued for some time.” The statement did little to reassure investors, though, causing stocks to give up gains and finish mixed. Some were hoping the central bank would articulate how it will curb inflation.

One piece of good news on Thursday was a slightly improved reading on gross domestic product. First-quarter GDP shrank 5.5 percent, the Commerce Department said, less than the previous estimate of 5.7 percent.