NEW YORK (AP) — Signs of growth in the U.S. economy combined with an unexpected interest rate cut in Europe to send the Dow Jones industrial average up more than 100 points for the second day in a row.
The European Central Bank surprised markets early Thursday by cutting its benchmark interest rate a quarter of a percentage point, to 1.25 percent. The bank had increased its key rate twice this year, but that was before Mario Draghi took over as head of the bank this week. The announcement sent European stock indexes modestly higher as investors hoped that lowering borrowing costs would help prevent a recession in Europe.
Reports on the U.S. economy also lifted stocks. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April. That's a sign layoffs are easing. Companies also made more orders to U.S. factories in September.
The Dow Jones industrial average gained 107 points, or 0.9 percent, to 11,943 as of noon Eastern. The S&P 500 rose 10, or 0.8 percent, to 1,247. The Nasdaq composite added 24, or 0.9 percent, to 2,664.
Despite the signs of growth, many investors were still focused on Europe's debt problems. Greece's prime minister shocked investors with a call this week to put a European rescue package to a vote. The prime minister was in an emergency meeting Thursday after members of his government called for him to step down. Many investors hope that a new government would approve the rescue package without a referendum.
Companies reporting quarterly earnings were among those making the biggest gains.
Estee Lauder Cos. jumped 15 percent, the top stock in the S&P 500. The company's quarterly earnings soared 46 percent on strong global sales, which beat analysts' expectations. The company also raised its annual earnings outlook.
Alpha Natural Resources rose 12 percent. The coal producer's profit more than doubled, helped by its acquisition of rival Massey Energy Co. and higher prices for coal used to make steel. The results topped estimates.
Qualcomm Inc. gained 7 percent, after the chip-maker for mobile phones said rising smartphone demand helped it post results that were stronger than analysts were expecting.
Kraft Foods Inc. rose 4 percent. The food company, whose brands include Nabisco and Maxwell House, reported a 22 percent jump in income thanks to higher prices on some of its products. Kraft also raised its full-year profit forecast.
Kellogg Co. dropped 7 percent after its quarterly earnings fell even further than analysts had expected. The cereal and snack maker was hit by higher costs for ingredients.