U.S. Stocks Advance; Tech Leads DJIA's Biggest Advance in Two Weeks
08/16/2012| 04:47pm US/Eastern
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--Stocks advance, extend gains after Germany's Merkel expresses desire to hold together euro zone
--New housing permits jump to highest level in four years; Philly Fed factory report contracts more than expected
--Facebook slumps 6.3% after "lockups" begin to expire
By Chris Dieterich
NEW YORK--Technology stocks helped drive the biggest advance for the Dow in almost two weeks after investors took comfort in German Chancellor Angela Merkel's stated commitment to hold together the euro zone.
The Dow Jones Industrial Average rose 85.33 points, or 0.7%, to 13250.11, and the Standard & Poor's 500-stock index added 9.98 points, or 0.7%, to 1415.51.
Thursday's gains pushed the benchmarks within striking distance of multiyear highs. The S&P 500, on pace to climb for its sixth straight week, closed just 3 1/2 points, or 0.2%, below its highest closing level since May 2008. The Dow is just 29 points below a nearly five-year high.
The Nasdaq Composite Index added 31.46 points, or 1%, to 3062.39.
Technology stocks rose the most, followed closely by growth-sensitive materials stocks. Dow component Cisco Systems surged 9.6% after the networking company reported quarterly earnings and revenue that topped analysts' estimates and raised its quarterly dividend by 75% to 14 cents a share.
Wal-Mart Stores notched the biggest decline among blue chips, slumping 3.1% after the retailing giant reported sales that fell short of expectations, countering quarterly earnings that were slightly above estimates.
Facebook fell 6.3%, hitting an all-time low in heavy trading volume, as lockups that prevented early investors in the social-networking giant from selling their shares began to expire Thursday. Overall, about 2 billion shares will become eligible for sale between now and May, nearly five times the number currently in circulation.
"Markets are trudging higher," said Paul Nolte, managing director of Dearborn Partners, which manages assets for institutional and private clients. "Even if it's a few points a day, markets have been improving ever so slightly, and the internals of the market are supportive of maintaining the trend."
U.S. stocks extended gains and European markets finished higher after Ms. Merkel said her country is "committed to do everything we can in order to maintain the common currency" at a joint news conference with Canadian Prime Minister Stephen Harper. The Stoxx Europe 600 rose 0.3%, finishing at a nearly five-month high. Spain's IBEX 35 surged 4.1%.
A raft of U.S. economic news delivered mixed results. Home building slipped in July, missing expectations, but new permits rose to their highest level in four years, a possible sign of confidence for construction going forward.
The Philadelphia Federal Reserve's index of manufacturing activity showed a bigger-than-expected contraction in August, one day after a New York reading showed contraction for the first time this year. The number of U.S. workers filing applications for unemployment benefits rose last week, in line with forecasts.
"We think residential construction will continue to support economic growth, but it will be difficult to offset weakness in other parts of the economy, like manufacturing," said Elizabeth Ptacek, senior vice president and real estate analyst at KeyBank in Cleveland.
In Asia, China's Shanghai Composite slipped 0.3% even after Chinese Premier Wen Jiabao hinted at more monetary stimulus in the world's second-largest economy. Other Asian markets were mostly higher, with Japan's Nikkei Stock Average gaining 1.9% to a six-week high. Australia's S&P/ASX 200 also climbed 1.1%.
Crude-oil futures rose 1.3% to finish at $95.60 a barrel, while gold futures settled up 0.8% at $1,616.10 a troy ounce. The dollar fell against the euro and gained ground against the yen. The yield on benchmark 10-year Treasurys rose to 1.836%, the highest since May, as demand fell.
Agilent slumped 8.2%, the biggest decline on the S&P 500, after the testing-and-measuring equipment maker's fiscal third-quarter earnings fell short of expectations and its full-year outlook was reduced, citing an environment of "much slower growth."
Perrigo fell 6.6%. The store-brand pharmaceutical and nutritional-products maker saw higher sales last quarter, but revenue missed estimates again.
Video-game maker Electronic Arts jumped 5.5% after a news report said the company, which is struggling against competition from free online-gaming sites, is exploring a sale. The New York Post said private-equity giants KKR and Providence Equity Partners approached the company about a potential deal. A spokesman from Electronic Arts said the company doesn't comment on rumors and speculation.
PetSmart rallied 4.6% after the pet-products retailer reported better-than-expected fiscal second-quarter results and raised its full-year earnings and sales-growth outlooks.
Sears Holding rose 6.5% after the retailer reported a second-quarter loss that narrowed on the company's cost-cutting measures, although sales declined more than expected.
Hi-Crush Partners gained 18% in its public debut, rising gradually through the session after starting out flat. The company produces premium monocrystalline sand, which is used to improve the recovery of oil and gas during hydraulic-fracturing drilling.
Write to Chris Dieterich at christopher.dieterich@dowjones.com
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