Stocks jump on economic news, rescue fund approval

Stocks soared Thursday after applications for unemployment benefits fell to a five-month low and Germany voted to expand the powers of Europes bailout fund. The Dow Jones industrial average shot up nearly 170 points in early afternoon trading.Banks, which would have the most to lose if Europes debt crisis gets worse, rose more than the rest of the market. JPMorgan Chase & Co. jumped 4.3 percent, the most of any stock in the Dow.Several strong reports on the US economy encouraged investors to buy stocks. First-time applications for unemployment benefits fell last week to 391,000. Thats the lowest level since April 2 and also the first time applications have fallen below 400,000 since Aug. 6. The big drop suggests that layoffs are decreasing.The government also raised its estimate of economic growth in the April-June period. The Commerce Department said the economy grew at a 1.3 percent annual rate in the second quarter, up from its previous estimate of 1 percent. It attributed the increase to growth in consumer spending and trade.This gives us a little more confidence that maybe the economy will muddle through here as we go through all these challenges, said Rob Lutts, president and chief investment officer of Cabot Money Management.The Dow Jones industrial average jumped 168 points, or 1.5 percent, to 11,178 at 12:15 p.m. (1615 GMT), erasing its loss from the day before.The Standard & Poors 500 index rose 19 points, or 1.6 percent, to 1,170. All 10 company groups that make up the S&P rose.Bank stocks rose sharply as worries eased about Europes debt problems. Morgan Stanley rose 5.7 percent. Genworth Financial Inc. soared 7.2 percent, the most of any company in the S&P 500 index. Janus Capital Group Inc. rose 5.4 percent.The Nasdaq composite index rose 5, or 0.2 percent, to 2,497.The measure approved by German lawmakers to expand the regions bailout fund must be approved by all 17 countries that use the euro. The plan will allow the bailout fund to buy government debt and lend money to troubled European countries. Finland approved the measure Wednesday.