US stocks climbed on Thursday, marking their third straight day in the black as a bigger-than-expected drop in weekly jobless claims and improved same-store sales from a number of retailers lifted McDonald's, American Express and Coca-Cola.
The Dow Jones Industrial Average rose 120.71 points (1.20%) to 10,138.99. The measure has risen 4.67% over the past three days, marking its best three-day performance since the three-day period ended May 12.
The Dow's top performers included many of its components that are heavily reliant on consumer spending, including McDonald's, which climbed $1.71 (2.5%) to $69.02, American Express, which added 97 cents (2.4%) to $42.12, and Coca-Cola, which advanced 95 cents (1.9%) to $52.42.
Boosting the stocks, retailers posted their strongest year-over-year growth in same-store sales since March. Also lifting investor sentiment, the number of US workers filing new claims for unemployment benefits fell last week by more than analysts expected.
The Nasdaq Composite climbed 15.93 (0.74%) to 2,175.40. The Standard & Poor's 500 index added 9.98 (0.94%) to 1,070.25. All of the S&P 500's categories closed Thursday's session in positive territory, with the materials and consumer-staples sectors leading the gains.
Department-store operators JC Penney and Macy's were among the retailers that posted same-store sales for June above analysts' estimates. JC Penney rose $1.46 (6.7%) to $23.24 and Macy's added 53 cents (3%) to $18.44. Other standouts included Abercrombie & Fitch, which jumped $2.55 (7.8%) to $35.45, and Victoria's Secret operator Limited Brands, which advanced 53 cents (2.2%) to $24.21.
Many of the retailers whose same-store sales disappointed were concentrated in the discount sector. Among them, Target fell 41 cents (0.8%) to $50.02; TJX dropped $1.98 (4.6%) to $41.53; and Ross Stores declined $1.32 (2.4%) to $54.03.
H&R Block tumbled $1.27 (8.2%) to $14.22 after the company said Chief Executive Russ Smyth has resigned and will be replaced by board member Alan M. Bennett. Smyth is leaving H&R Block to become CEO at "a large private company headquartered in his hometown of Chicago," the tax preparer said.
Goldman Sachs Group slipped 37 cents (0.3%) to $135.46 after banking analyst Meredith Whitney lowered her earnings estimates on the stock ahead of the company's quarterly results, expected in two weeks.
Tractor Supply climbed $1.65 (2.6%) to $65.41. The retailer of tractor parts and farm supplies raised its 2010 earnings and sales forecasts, and provided preliminary earnings and sales numbers for the second quarter that topped analysts' estimates.
Merck edged up 43 cents (1.2%) to $35.86. The drug-making giant unveiled further details of how it plans to integrate operations following November's $41bn acquisition of Schering-Plough, saying it will close another 16 facilities around the world. Merck expects the initial phases of the merger restructuring program to result in savings of about $2.7bn to $3.1bn in 2012.
For Australian ADRs listed on the NYSE, BHP Billiton firmed 75 cents (1.14%) to US$66.75, Rio Tinto Plc added 40 cents (0.85%) to US$47.28, ResMed advanced 98 cents (1.53%) to US$65.00, Telstra Corporation improved 22 cents (1.59%) to US$14.05, Telecom Corporation of NZ climbed 14 cents (2.13%) to US$6.72 and Westpac increased $2.22 (2.37%) to US$95.92.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.03% and the five year yield was 1.81%.
In economic news, in a hopeful sign for the labour market, the number of US workers filing new claims for unemployment benefits fell 21,000 to 454,000 in the week ended July 3. Economists were expecting claims to drop to 460,000. The four-week moving average fell to 466,000.
Consumers in the US cut their borrowing a fourth straight time in May as they shore up finances in a lacklustre economy. Consumer credit fell at a 4.5% annual rate, dropping $9.1bn to $2.415tr; economists expected a more modest $2bn drop.
Banks climbed sharply for a second day in Europe on Thursday, on trader relief at the details of stress test methodology that have been announced.
After ending 1.4% higher on Wednesday, the Stoxx Europe 600 index rose 1% to 248.60 on Thursday, bringing weekly gains to 4.8%.
Banks were in the lead for the second day, with National Bank of Greece shares up 5.5% and Lloyds Banking Group shares up 4.3%. More details about methodology for bank stress tests in Europe became available or were reported, though details still remain sketchy.
Both the European Central Bank and the Bank of England kept interest rates on hold on Thursday. At the press conference after the decision, European Central Bank President Jean-Claude Trichet suggested banks may have to recapitalise after the stress test publication. He also said markets have been too pessimistic regarding Europe.
At the regional level, the UK's FTSE 100 index gained 1.8% to 5,105.45, the French CAC-40 index rose 1.6% to 3,538.25 and the German DAX index added 0.7% to 6,035.66.
Of companies in the spotlight, French oil giant Total rose 2.2% after an upgrade to buy from neutral. A broker said that Wednesday's announced acquisition of a 20% interest in the Fort Hills mining project in the Canadian province of Alberta "adds to critical mass in the oil sands" business.
BP shares were up 1.4%. The oil major's working to fix its leaking Gulf of Mexico oil well by July 27, possibly weeks ahead of the deadline it is discussing publicly, to control its rising liabilities, it was reported.
Also higher, shares of Danish shipping group AP Moller-Maersk jumped 4.5% after it lifted its profit outlook. It now expects its fiscal-year profit to exceed the $3.5bn profit recorded in 2008, provided that freight rates, oil prices and the US dollar's exchange rate remain stable.
On the FTSE 100, Rio Tinto rose 37.50 pence (1.24%) to 3,094.95 pence and BHP Billiton firmed 30.00 pence (1.68%) to 1,814.70 pence.
Most Asian stocks and currencies jumped as hopes for strong corporate results in the region as well as in the US spurred risk appetite.
Japan's Nikkei Stock Average climbed 2.8%, China's Shanghai Composite slipped 0.3% and Hong Kong's Hang Seng Index added 1.0%.
New Zealand shares ended higher, with investor sentiment lifted by a strong night on Wall Street and gains in the Australian market after a better-than-expected June employment report.
Brokers said investors were cheered after the Dow rose 2.8%, back above the key 10,000-point level. The benchmark NZX-50 ended up 0.8%, or 22.20 points, at 2,983.93.
Base metals on the London Metal Exchange ended slightly higher but well below their highs as early gains slipped away and momentum faded from a nine-day rally across the metals. Aluminium fell $15 (0.75%) to $1,985 while copper weakened $40 (0.60%) to $6,660 and nickel rose $205 (1.07%) to $19,375. Zinc firmed $5 (0.27%) to $1,865 and lead added $25 (1.39%) to $1,825. Comex copper was last quoted at 303.20 US cents per pound.
Gold futures fell slightly, settling just above six-week lows as stabilising equities and currency markets had fewer investors seeking solace in the yellow metal. Spot gold was last quoted at $1,197.25. Comex gold futures dipped $2.80 (0.23%) to $1,196.10. Spot silver was last quoted at $17.91.
Crude oil rose on Thursday, supported by a drop in US oil stockpiles even as a surprise jump in gasoline inventories raised concerns about demand.
West Texas Intermediate was last quoted at US$75.44 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.7879 euros, 88.35 yen, 1.141 AUD and 65.98 pence.