* Sprint jumps on reports of possible Softbank deal
* S&P cuts Spain to just above junk rating
* Indexes up: Dow 0.3 pct, S&P 0.6 pct, Nasdaq 0.6 pct
By Chuck Mikolajczak
NEW YORK, Oct 11 (Reuters) - U.S. stocks advanced on
Thursday after data showed initial jobless claims fell to the
lowest level in more than four and a half years, suggesting
improvement in a key factor for economic growth.
The number of Americans filing new claims for unemployment
benefits dropped by 30,000 to a seasonally adjusted 339,000,
according to Labor Department data. Economists polled by Reuters
had forecast claims edging up to 370,0000 last week.
The report follows last week's government report that showed
a surprising drop in September's unemployment rate to 7.8
"Claims looked pretty strong, definitely a big drop down.
We're starting to hear noise about companies hiring, and that's
what the market is waiting for," said Jordan Waxman, managing
director Hightower Advisors in New York.
"Without labor market improvement, we can't get a
sustainable rally. The numbers seem to be moving in the right
Stock futures were also supported by a note from Citigroup,
which upgraded U.S. equities to "overweight," citing cheap
equity valuations and aggressive central bank actions to
stimulate the economy.
The benchmark S&P 500 index had shed 2 percent over the
prior four sessions, its biggest four-day drop since late July,
amid concern about the impact of slowing world growth on
Weak global demand has heightened investor worry over the
corporate earnings season. As a group, S&P 500 companies'
third-quarter earnings are expected to fall 2.9 percent from a
year ago, according to Thomson Reuters data for the first
decline in three years.
The S&P 500 rose 2.4 percent in September but has dropped
0.6 percent thus far in October as investors' focus has shifted
to stock fundamentals.
Other data showed the U.S. trade deficit widened in August
to $44.2 billion. U.S. exports fell for a fifth consecutive
month and imports declined slightly, hinting at weaker U.S. and
The Dow Jones industrial average gained 42.92 points,
or 0.32 percent, to 13,387.89. The Standard & Poor's 500 Index
gained 8.09 points, or 0.56 percent, to 1,440.65. The
Nasdaq Composite Index gained 19.25 points, or 0.63
percent, to 3,071.03.
Sprint Nextel Corp shares jumped 13.5 percent to $5.72
as the best performer on the S&P 500 after a source familiar
with the matter told Reuters Softbank Corp, Japan's
third-largest mobile carrier, is in talks to acquire a majority
stake in the No. 3 wireless carrier in the United States.
Clearwire Corp, in which Sprint holds a majority
interest, surged 27.3 percent to $1.65. MetroPCS shares
dropped 8.4 percent to $11.03 as a Softbank deal would rule out
Sprint making a counter-bid for the company which recently
agreed to be acquired by Deutsche Telekom AG.
Fastenal Co climbed 8.3 percent to $45.82 after the
company posted third-quarter earnings.
Winnebago Industries Inc reported a higher quarterly
profit and strong growth in its order backlog as demand for its
motor homes grew. Shares gained 2.9 percent to $12.55.