Stocks edge up as ECB buys bonds; retailers gain

October 6, 2011 - 9:40 AM
Wall Street

In this Oct. 4, 2011 photo, trader Vincent Quinones, second from right, works on the floor of the New York Stock Exchange. Hopes that Europe is preparing a big plan to shore up its banks gave stocks around the world another lift Thursday, Oct. 6, 2011, ahead of keenly-awaited policy decisions from the European Central Bank and the Bank of England.(AP Photo/Richard Drew)

NEW YORK (AP) — Stocks edged higher in early trading Thursday after Europe's central bank offered new support to the region's lenders and U.S. retailers like Target reported higher September sales.

The European Central Bank offered new emergency loans to European banks. It also announced that it would buy bonds issued by banks, making it easier for them to lend.

Both measures are aimed at supporting European lenders. Investors have been worried that major European banks could face big losses if Greece defaults on its debt, as many expect will happen.

That would likely cause the value of Greek debt held by those banks to fall sharply in value. If that causes a big enough shock to those banks they could stop lending to each other, causing another freeze in global credit markets, as happened following the collapse of Lehman Brothers in 2008.

In the U.S., the Labor Department said the number of new applications for unemployment benefits rose slightly last month to 401,000. While that is a signal that the job market continues to be weak, the number was slightly less than what Wall Street economists had predicted. Unemployment benefits typically need to fall below 375,000 to signal job growth.

An hour after the start of trading, the Dow Jones industrial average was up 28 points, or 0.3 percent, to 10,968.

The S&P 500 index was up 4, or 0.3 percent, at 1,147. The Nasdaq composite was up 14, or 0.6 percent, to 2,474.

Retailer Target Corp. gained 4 percent after its September sales results beat Wall Street's expectations. Other retailers also announced better than expected results, sending consumer discretionary stocks in the S&P 500 up 0.3 percent.

Corning rose 3.1 percent after it said it would increase its dividend and buyback shares.