U.S. stocks closed broadly higher Thursday as equity investors embraced a better-than-expected third-quarter earnings report from Alcoa (AA), some upbeat September sales reports from major retailers, and data showing a weekly drop in jobless claims.
Stocks tied to the retail, basic materials, energy, and commodities sectors were among the best performers.
Also Thursday, the European Central Bank and Bank of England left interest rates unchanged.
On Thursday, the 30-stock Dow Jones industrial average finished higher by 61.29 points, or 0.63%, at 9,786.87. The broad Standard & Poor's 500-stock index added 7.90 points, or 0.75%, to 1,065.48. The tech-heavy Nasdaq composite index gained 13.60 points, or 0.64%, to 2,123.93.
On the New York Stock Exchange, 22 stocks were higher in price for every eight that declined. Breadth on the Nasdaq was 15-11 positive.
Treasuries fell after a disappointing $12 billion 30-year bond auction.
The dollar index declined amid persistent concerns the U.S. economic recovery and the government's huge and growing debt will spur inflation in the future.
The lower greenback helped gold futures to rally. December gold futures were up $10.20 to $1,054.60 per ounce in afternoon trading, down a bit from a session high of $1059.60.
Crude oil futures also advanced on the lower dollar, with November West Texas Intermediate crude oil futures up $2.21 to $71.78 per barrel in afternoon trading.
In economic news Thursday, U.S. wholesale sales rose 1.0% and inventories fell 1.3% in August. July's 0.5% increase in sales was revised up to 0.6%. Sales excluding petroleum rose 0.3%. Auto sales were up 7.7%. The 1.4% decline in July inventories was revised down to -1.6%. Inventories excluding petroleum fell 1.5%. Auto inventories dropped 2.3%. The inventory-shipment ratio declined further to 1.20 from 1.23 in July.
U.S. jobless claims fell a bigger than expected 33,000 to 521,000 in the week ended October 3, after a revised 554,000 the prior week (was 551,000). The four-week moving average dipped to 539,750 from 548,750. Continuing claims declined 72,000 to 6,040,000 in the week ended September 26, from a revised 6,112,000 (was 6,090,000). That's a second straight weekly decline.
The claims data suggest meager improvement in jobs, and that could give a little extra push higher to stocks and further weigh on Treasuries," says Action Economics. Reuters reported the European Central Bank kept its interest rates at a record-low 1.0% on Thursday. ECB President Trichet in his summary repeated that rates remain appropriate, adding that data confirms the ECB's previous assessment. The president added that monetary policy is providing strong support to the economy and repeated that measures will be unwound in a timely fashion when the economy improves. At the same time Trichet called on governments to design exit strategies and said the need for fiscal action is "increasingly pressing".
Meanwhile, the Bank of England left interest rates at a record low of 0.5% for the seventh month running and said it would keep its 175 billion pound asset buying program in place, as expected.
Australian jobs rose more than expected 40,600 in August and unemployment fell 0.1% to 5.7%.
Standard & Poor's Investment Policy Committee raised its 12-month price target for the S&P 500 index to 1150 from 1100, and increased its exposure to global equities.
Alcoa said its third-quarter net earnings were $77 million, or 8 cents per share, compared with earnings of $268 million, or 33 cents per share in the same quarter of 2008. Wall Street had been looking for a loss. Alcoa, which has curtailed metal production by more than 20% and cut its workforce by about 30% since the economic downturn began a year ago, said there are signs that key markets are stabilizing and it expects global consumption to rise by 11 percent in the second half of this year.
PepsiCo (PEP) reported third-quarter core earnings per share of $1.08, vs. $1.06 core EPS (excluding items) one year earlier, as lower overhead costs, prior-year hedging losses offset a 1.5% drop in revenue. The soft-drink and food concern reaffirmed its 2009 guidance for mid-to high-single-digit core constant currency EPS growth off 2008's core EPS of $3.68. For 2010, the company targets constant currency EPS growth of 11%-13%.
A number of major retailers reported September sales results Thursday. A late Labor Day and delayed school openings offered some relief to merchants in September, according to an Associated Press report, helping to boost sales above Wall Street expectations. But spending still remains tepid as consumers focused on necessities amid job worries and tight credit.
Still, most stores posted sales declines -- though smaller than in recent months -- even as their figures are compared with last September when business plummeted as the financial meltdown ballooned. J.C. Penney Co. (JCP), Macy's Inc. (M), and teen retailer Wet Seal Inc. (WTSLA) reported smaller-than-expected declines in sales at stores open at least a year. The measure is considered a key indicator of a retailer's health.
Limited Brands (LTD), which runs Victoria's Secret and Bath & Body Works, and accessories chain The Buckle Inc. both posted increases for the month.
On the IPO front, shares of engineering services company Mistras Group (MG) made their public debut Thursday. The offering of 8.7 million shares priced Wednesday at $12.50 per share. Mistras initially indicated it would price its shares at between $14 and $16 per share.