U.S. Stocks Rise on Jobless Claims Amid Nasdaq Trade Halt

U.S. stocks rose on data showing improvement in global manufacturing and the American labor market amid a three-hour trading halt on the Nasdaq Stock Market after a computer error.

A gauge of homebuilders added 1.9 percent after a report showed house prices rose 7.7 percent in June from a year ago. Yahoo Inc. rallied 3.1 percent as data showed it attracted more U.S. visitors than Google Inc. in July. Hewlett-Packard Co. slid 12 percent after the personal computer maker’s quarterly profit forecast missed some analysts’ estimates. Abercrombie & Fitch Co. plunged 18 percent as second-quarter earnings that fell short of forecasts.

The Standard & Poor’s 500 Index gained 0.9 percent to 1,656.96 at 4 p.m. in New York. The Dow Jones Industrial Average rose 66.19 points, or 0.4 percent, to 14,963.74. The measure snapped a six-day losing streak, its longest slump in 13 months. The Nasdaq Composite Index rose 1.1 percent to 3,638.71 after trading resumed following a computer error.

“The employment numbers were encouraging and showed a continuation of slow growth in employment,” Paul Mangus, head of equity strategy and research for Wells Fargo Private Bank in Charlotte, North Carolina, said in a telephone interview. His firm manages $170 billion. “There are signs of stabilization in China and improvement in Europe, which could help U.S. multinationals in the long run.”

Trading Halt

Computer breakdowns shook American equity trading again as malfunctioning software that feeds data between exchanges prompted Nasdaq to halt trading in stocks and options today starting around 12:20 p.m. in New York. Trading resumed about three hours later.

Buying and selling in many of the country’s most heavily traded shares from Apple Inc. to Intel Corp. and Facebook Inc. ground to a virtual standstill. The disruption comes just two days after options markets were roiled by mistaken trades sent by Goldman Sachs Group Inc.

“It’s a big deal for the Nasdaq, but it wasn’t as impactful on the market as you would expect,” Douglas Kass, the founder of Palm Beach, Florida-based Seabreeze Partners Management Inc., said in a phone interview. “There’ll be some residual loss of confidence on the part of retail investors but beyond that I don’t think it’ll have impact.”

Nasdaq faced criticism last year when it mishandled the public debut of Facebook, causing hundreds of millions of dollars in losses for its member firms. The company’s shares fell 3.4 percent to $30.46 today, after earlier rising as much as 1.1 percent.

Volume Drop

The halt resulted in the second fewest number of shares changing hands on U.S. exchanges in at least five years during a full-day session, excluding holiday trading. About 4.4 billion shares traded today, 30 percent below the three-month average. Volume was lower only on Oct. 8, 2012, according to data Bloomberg began compiling in 2008.

About 740 million exchange-listed shares changed hands during the three hours through 3:20 p.m. in New York following the suspension, or a third of the total transactions over the first three hours of today’s trading, the data show.

The S&P 500 fell 0.6 percent yesterday to the lowest level since July 8 as minutes from the Federal Reserve’s July meeting showed officials support stimulus cuts this year if the economy improves.

Fed stimulus helped push the S&P 500 up as much as 153 percent from its March 2009 low, as better-than-estimated corporate earnings also fueled equity gains. Of the 483 companies in the S&P 500 that have reported quarterly earnings this period, 71 percent surpassed profit estimates, Bloomberg data show.

Jobless Claims

The fewest workers in more than five years applied for U.S. unemployment benefits over the past month, indicating the labor market continues to improve.

The number of claims in the month ended Aug. 17 declined to 330,500 a week on average, the least since November 2007, a Labor Department report showed today in Washington. Compared with a week earlier, claims rose by 13,000 to 336,000, in line with the median forecast of 48 economists surveyed by Bloomberg.

The Fed has said it plans to keep benchmark interest rates near zero at least as long as the unemployment rate is above 6.5 percent and inflation is no more than 2.5 percent.

Speculation about the stimulus has whipsawed stocks since May, when the Fed first indicated cuts could start this year. The S&P 500 tumbled 5.8 percent from a record high on May 21 through June 24. It then rebounded as much as 8.7 percent to close at its latest record of 1,709.67 on Aug. 2. The index finished yesterday 3.9 percent below the all-time high.

Volatility Gauge

The Chicago Board Options Exchange Volatility Index, or VIX, dropped 7.4 percent to 14.76 today, after jumping yesterday to the highest since July 3. The equity volatility gauge has retreated 18 percent this year as the S&P 500 has rallied 16 percent on growing signs economic growth is improving.

Data today showed the Conference Board’s index of leading economic indicators increased 0.6 percent in July. The median forecast in a Bloomberg survey of economists called for a 0.5 percent advance.

Overseas reports showed Germany led growth in manufacturing and services in the euro area, while a gauge for China’s factory output unexpectedly showed expansion.

Energy stocks rallied 1.4 percent and materials producers jumped 1.2 percent as all 10 main industries in the S&P 500 advanced today.

Miners Rally

Cliffs Natural Resources Inc. surged 5.8 percent to $22.44, snapping a string of five straight losses. Freeport-McMoRan Copper & Gold Inc. added 3.3 percent to $31.35 to pace gains among miners. Industrial metals rallied on the data from China, the world’s biggest consumer of commodities.

A factory index released by HSBC Holdings Plc and Markit Economics showed a preliminary reading of 50.1, exceeding the 48.2 median estimate of economists in a Bloomberg survey. Readings above 50 signal growth.

Barrick Gold Corp., the world’s biggest producer of the precious metal, gained 2.6 percent to $19.56. Gold Fields Ltd. said it will pay $300 million for Barrick’s Granny Smith, Lawlers and Darlot gold mines in Western Australia.

The S&P Supercomposite Homebuilding Index rose 1.9 percent. All 11 members advanced after the Federal Housing Finance Agency report showed home prices extending a recovery. Prices climbed 0.7 percent in the month on a seasonally adjusted basis from May.

Toll Brothers Inc. gained 2.6 percent to $32.47 and PulteGroup Inc. climbed 1.4 percent to $16.32.

Yahoo Hits

Yahoo, the biggest U.S. Web portal, added 3.1 percent to $27.90. More than 196 million users spent time on Yahoo’s websites in July, ComScore Inc. said. That’s 4.3 million more than Google Inc. and the first time Yahoo’s Web traffic surpassed that of the world’s most popular search engine since May 2011.

GameStop Corp. jumped 9 percent to $51.91 for the biggest gain in the S&P 500. The largest specialty retailer of video games gained the most in a year after raising its full-year profit forecast ahead of the release of new consoles from Sony Corp. and Microsoft Corp.

Hewlett-Packard tumbled 12 percent to $22.22, the steepest slide in the Dow. The computer maker issued a forecast for fiscal fourth-quarter profit that missed some analysts’ estimates, and Chief Executive Officer Meg Whitman rescinded a projection for growth in fiscal 2014 as ebbing demand for personal computers and lower business spending hamper her turnaround efforts.

Retailers Slide

Abercrombie & Fitch plunged 18 percent to $38.53, the biggest drop since November 2011. The retailer reported second-quarter earnings of 16 cents a share, compared with the average analyst estimate of 29 cents and its own forecast of at least 28 cents.

Sears Holding Corp. slumped 8.2 percent to $39.72, the lowest close this year. The retailer controlled by Edward Lampert said its second-quarter loss widened to $194 million as its loyalty program members used more discounts. Members of the company’s Shop Your Way program accounted for more than 65 percent of sales at Sears operations and Kmart in the quarter. Sales fell 6.3 percent to $8.87 billion.

To contact the reporters on this story: Alex Barinka in New York at abarinka2@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net

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