Banks lead early stock advance
Wall Street rises on U.K. bank deal, potential Citigroup deal. Gains are limited by a dismal jobless claims report.
NEW YORK (CNNMoney.com) -- Financial shares led a slim advance Thursday morning after Britain announced a plan to insure bank assets amid a worsening economy and Citigroup reportedly neared a deal for the U.S. government to take a bigger stake in the company.
Investors were also weighing a bigger-than-expected loss from GM and a surge in weekly jobless claims, which hit a 26-year high
The Dow Jones industrial average (INDU) gained 65 points, or 0.9%, in the early going. The S&P 500 (SPX) index rose 8 points, or 1%. The Nasdaq composite (COMP) advanced 3 points, or 0.3%.
On Wednesday, stocks ended lower, unable to sustain a late-day rally. The major indexes all lost a little more than 1%.
Global markets on Thursday were mixed. The Asian markets closed lower, with Tokyo's Nikkei index down just barely. The European indexes were sharply higher in morning trading on the U.K. government deal, despite the British bank RBS reporting the biggest loss in U.K. history.
Investors have been rattled by a spate of dreadful economic news and nervousness about whether President Obama's turnaround plans will come to fruition quickly enough.
One of his goals is to slash the United States' $10.8 trillion debt load. He will start spelling out how he plans to accomplish that when he unveils an outline of his budget request for fiscal year 2010 on Thursday.
Dave Rovelli, managing director of Canaccord Adams, said the jobless claims and durable goods reports will be the "big catalyst" in morning trading, rather than GM, which "everyone has written off."
Prior to the jobless report, Rovelli said the "oversold" stock market is poised for a rally, so long as claims did not exceed 635,000. But later on, they came in much higher than that.
Economy: The government said that initial jobless claims rose to 667,000 in the week ended Feb. 21, the highest level since October 1982. This exceeded the 625,000 claims that were expected by economists, according to a consensus from Briefing.com.
Continuing claims, an important measure of the job market, broke the prior week's record with a total of 5,112,000, the government said. The number of people continuing to file for unemployment benefits had hit a record high of 4,987,000 in the week ended Feb. 7.
The government's latest reading on durable goods orders - a measure of the demand for factory-made products - plunged 5.2% in January. That was more than double the 2.5% decline expected by a consensus from Briefing.com.
At 10 a.m. ET, the government will release figures for new home sales in January. Sales are forecast to have dipped to a 329,000 annual unit rate from a 331,000 annual unit rate in December.
Housing has been at the heart of the economic turmoil. On Wednesday, sales of existing homes hit their lowest point since 1997.
Companies: General Motors (GM, Fortune 500) announced a quarterly loss of $5.9 billion, or $9.65 a share, which was worse than expected. The forecast was a loss of $7.39 per share, according to a consensus of analysts surveyed by Thomson Reuters. The battered company also said its auto operations burned through $5.2 billion in cash.
GM shares were down about 5.5% in early trading.
Citigroup (C, Fortune 500) is closing in on a deal that would give the federal government as much as a 40% stake in the beleaguered banking company, the Wall Street Journal reported. The paper said the agreement could be announced as early as Thursday.
Citi shares were up about 10% in early trading.
Oil and money: Oil prices rose 40 cents to $42.90 a barrel, after jumping more than $2 a barrel on Wednesday. 
