Jobs reports push stocks higher; Retailers rise (AP)

NEW YORK – Better news on jobs drove stocks higher Thursday. Target, Gap and other large retailers jumped after reporting stronger sales.

The government reported that the number of people who made first-time claims for unemployment benefits dropped to 418,000 last week, the lowest level in seven weeks. That's a sign that employers are laying off fewer workers.

Separately, payroll processor Automatic Data Processing said companies added 157,000 employees in June. The bulk of the hiring came from small businesses. The tally is more than double the number economists had forecast and far more than the 36,000 added the previous month.

Warm weather and deep discounts resulted in the best June sales figures for U.S. retailers since 1999. Kohl's Corp. rose 6.6 percent, the most of any stock in the S&P 500 index. Target Corp. was close behind with a gain of 6.4 percent. Both reported strong sales for June.

Investors have been concerned that high gas prices would constrain consumer spending as people made fewer shopping trips and looked for ways to save money. The higher sales figures reassured markets that consumers were becoming more willing to spend again.

"The closest thing to an unadulterated barometer of our progress is same-store sales," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago "Everything is tied to it: Sales drives profits, profits drive hiring and hiring drives sales. It's a neat, virtuous circle."

The news comes a day before the Labor Department releases its closely-watched monthly employment report. Economists estimate the unemployment rate will remain at 9.1 percent and that employers added only 90,000 jobs last month.

In early afternoon trading, the Dow Jones industrial average rose 79 points, or 0.6 percent, to 12,705. The S&P 500 index gained 11, or 0.8 percent, to 1,350. The Nasdaq composite index rose 34, or 1.2 percent, to 2,868.

Sales at Kohl's increased by more than double what analysts expected. Kohl's credited warmer weather in the Midwest and Northeast with pushing customers to shop for summer clothing.

The three major U.S. stock indexes are now up 2 percent of more so far this month. A string of good news gave stocks their best week in two years last week and allayed fears that the global economy was sinking into another recession. U.S. manufacturing rebounded and Greece's parliament approved budget-cutting measures needed before it receives another round of emergency loans.

Trading has been very light in the stock market this week. Markets were closed in the U.S. on Monday for the July 4th holiday. No major corporate earnings came out this week. Aluminum maker Alcoa Inc. becomes the first major U.S. company to report second-quarter earnings on Monday.