U.S. Stocks Rally; S&P 500 Targets Record

By Dan Strumpf 

U.S. stocks advanced on Thursday, with the S&P 500 on track for a record close, as European equities regained ground and bond markets stabilized.

The Dow Jones Industrial Average rallied 186 points, or 1%, to 18247 in afternoon trading. The S&P 500 gained 22 points, or 1%, to 2120. The Nasdaq Composite Index added 63 points, or 1.3%, to 5045.

Other markets that had seen sharp losses in recent sessions regained ground. European stocks extended their gains as U.S. trading got under way, with Germany's DAX snapping a three-day losing streak to gain 1.8%.

Government bonds in the both the U.S. and Europe rose. The yield on the 10-year Treasury note fell to 2.228% from 2.283%, as prices rose. The dollar fell against the euro.

Traders said there was no single catalyst behind Thursday's advance, pointing instead to signs of stability in other markets that have been rocked by volatile trading in recent sessions. That calm has prompted some investors to wade back into U.S. stocks, they said.

"First the stability in the dollar had our markets calmed down, then you had the bond market calming down," said Rick Fier, director of execution services at Conifer Securities. "Stability in the FX market, stability somewhat in the bond market, all leads to equities pushing higher."

The gains in U.S. stocks put the S&P 500 on course for a new record finish, topping the S&P's April 24 record of 2117.69. The Dow is still 0.2% away from its March 2 record of 18288.63.

Technology stocks pulled ahead of the broader market, with the S&P 500 Information Technology index rallying 1.6%.

Government bonds in the U.S. and Europe have sold off sharply in recent sessions, leading to uneven trading in U.S. stocks. The rout marked a turnaround from earlier this year when the European Central Bank's bond-buying program helped boost European bond prices to record highs. At the same time, the dollar has spent much of the year rising sharply against other currencies, denting the bottom lines of large U.S. multinational companies.

With Thursday's rally, the S&P 500 is up 1.6% in May, while the Dow has advanced 2.3%.

In economic news, jobless claims fell by 1,000 to 264,000 in the week ended May 9, the Labor Department said. Economists surveyed by The Wall Street Journal had expected 273,000 new claims.

Crude-oil futures fell 1% to $59.88 a barrel. Prices are still up 38% in the last two months.

"It seems like some of the reversals that we've seen--oil rising, rates moving up--are a bit more stable...and that's helping" support markets, said Michael Arone, State Street Global Advisors' chief investment strategist.

Separately, the producer-price index for final demand fell 0.4% in April from March, the Labor Department said. Excluding the volatile food and energy categories, core prices fell 0.2%. Economists had expected both overall and core prices would rise 0.1%.

In other markets, gold futures gained 0.6% to $1225.40 an ounce.

In corporate news, Cisco Systems Inc. said net income in its fiscal third quarter rose 12% on revenue that increased 5.1%. Shares fell 0.7%.

Shares of Kohl's Corp. tumbled 12% after the retailer posted disappointing sales growth in the first quarter after a weak February.

Shares of Avon Products Inc. rose 5.3% after an entity calling itself PTG Capital Partners Ltd. said in a securities filing it was looking to buy the beauty products maker. Avon said it hadn't received any such bid or even been able to confirm that PTG Capital existed.

Shares of DuPont gained 1.2%, rebounding from a loss of 7.4% on Wednesday.

Write to Dan Strumpf at [e-mail]

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