Stocks rise on economic reports, Mario Draghi's comments

Stocks rallied on Thursday ahead of the release of a key employment report.

The Dow Jones Industrial Average gained 80.75 points to 13,575.36. The Nasdaq Composite Index was up 14.23 points to 3,149.46, and the S&P 500 Stock Index rose 10.41 points to 1,461.40.

The Department of Labor reported initial claims for jobless benefits rose by 4,000 in the week ending Sept. 29 to 367,000, slightly below expectations. On Friday morning, the department will release the September report on job creation and the nation's unemployment rate.

Oil prices recovered all of the loss from Wednesday as prices responded to a fire at the nation's largest oil refinery in Texas. Crude gained $3.57 to $91.71 a barrel. Gold moved close to the $1,800 an ounce level, finishing with a gain of $16.70 to $1,796.50.

All 10 industry groups in the S&P 500 advanced. Gap Inc. (NYSE: GPS) and Target Corp. (NYSE: TGT) gained among retailers after monthly same-store sales topped estimates. Ryder System Inc. (NYSE: R) jumped 6 percent amid an analyst upgrade.

“In the last several weeks, we have coordinated global monetary stimulus, and that’s starting to show up in the change of trends in American economic statistics,” said Douglas Cote, chief market strategist at New York-based ING U.S. Investment Management. His firm oversees about $165 billion. “Employment, manufacturing, services and consumer sentiment have all gone from weakening to strengthening.”

The S&P 500 has rallied 16 percent this year as central banks from the United States to China took steps to stimulate economic growth. The Federal Reserve last month announced a third round of quantitative easing by purchasing mortgage-backed securities at a pace of $40 billion per month until labor markets “improve substantially.”

Fed policymakers said they could change the size of the central bank’s monthly asset purchases to reduce the risks associated with the program, such as disrupting financial markets and spurring inflation, according to the record of the Federal Open Market Committee’s Sept. 12-13 gathering released Thursday in Washington.

European Central Bank President Mario Draghi said the bank is ready to start buying government bonds as soon as the necessary conditions are fulfilled. The ECB kept interest rates unchanged at a historic low of 0.75 percent.

“The jobless claims report was OK and Draghi is signaling he will do whatever it takes, so I’m not expecting him to take his foot off the accelerator,” said Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc. (NYSE: FII), which oversees about $370 billion. “Every data point in the U.S. will be viewed through a market prism and a political prism now.”

Mitt Romney challenged President Barack Obama in their first debate Wednesday night, and polls conducted in the immediate aftermath by CNN and CBS News both indicated voters thought Romney had won the encounter at the University of Denver. Romney has said he wouldn’t appoint Federal Reserve Chairman Ben Bernanke to a third term, while his running mate, House Budget Committee Chairman Paul Ryan of Wisconsin, has said he doesn’t want the Fed to provide additional stimulus.

Financial shares rose 1.5 percent for the biggest advance among 10 S&P 500 groups. Bank of America Corp. (NYSE: BAC) rallied 3.3 percent to $9.41, while Citigroup Inc. (NYSE: C) gained 2.6 percent to $34.96.

Coal producers rallied as analysts forecast an end to four straight quarters of declines, the fuel’s longest slump in seven years, and Romney said in the debate last night that he likes coal.

“Mitt Romney made a point to single out coal as an important part of the U.S. energy policy,” said Michael Dudas, an analyst with Sterne Agee & Leach Inc. in New York. “The view is that Obama has been negative toward coal relative to the regulatory efforts that the administration has put forth. A potential Romney victory is more positive for energy in general, and coal in particular.”