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Last updated November 5, 2009: 12:45 PM ET --- The major U.S. equity indices are trading higher Thursday following encouraging news on jobs and worker productivity which helped increase investor optimism about economic recovery. The Labor Department said first-time claims for jobless benefits last week fell by 20,000 to a seasonally adjusted 512,000, better than economists estimates of 523,000, and the lowest level since January. The report gave investors hope that the monthly report on employment, due out tomorrow, may prove better than expected. Economists estimate an unemployment rate of 9.9% for October. The government said that the amount of output per hour worked rose 9.5% in the July-September quarter, ahead of the economists expectations for a rise of 6.4%, which also improved investor optimism. Retailers posted a 2.1% sales gain for October after more than a year of declines, providing hope that consumer are starting to spend more. In corporate news, Cisco (NASDAQ:CSCO) helped to pull tech stocks higher after the company said Wednesday that it expects revenue to grow for the first time in a year for the quarter ending in January. Costco (NASDAQ:COST) posted a 5% sales increase in stores open at least a year. Barclays (NYSE:BCS) upgraded Palm (NASDAQ:PALM) to "equal weight" to "underweight". Comcast (NASDAQ:CMCSA) was downgraded to "hold" from "buy" by Collins Stewart. The Dow Jones Industrial Average is trading 1.64% higher at 9,962.88, the S&P500 is up 1.46% at 1,061.75, and the Nasdaq Composite is up 1.92% at 2,094.88.

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