Weekly Jobless Claims Show Surprise Drop

The 4-week moving average of initial claims was 637,250, down 10,750 from the previous week.

That's the good news. But the bad news should not surprise. Continuing claims jumped to a new record, with 6,271,000 people continuing to file for unemployment insurance. That's an increase of 133,000 from the previous week.

The 4-week moving average for continuing claims was was 6,076,000, an increase of 131,500 from the previous week.

Ian Shepherdson, economist at High Frequency Economics, wrote in a research note:

"The past few weeks' claims data are beginning to look increasingly like a peak."

Even given that, economists feel that unemployment will reach 10% later this year before recovering in 2010.

Stocks appear to be up on the latest unemployment news.