Wal-Mart, Other Retailers Help U.S. Stocks Rebound
NEW YORK (MarketWatch) -- Stocks extended gains Thursday afternoon as crude-oil futures fell and retail sales for April showed consumers still spending, albeit more frugally.
"Consumers are seeking bargains, bulking up and scaling down," said Art Hogan, chief market strategist at Jefferies & Co., who pointed to Wal-Mart Stores Inc., Costco Wholesale Corp., BJ's Wholesale Club Inc. and Kohl's Corp. as reporting better-than-expected sales results, with Target Inc. among the misses.
The Dow Jones Industrial Average climbed 86.47 points, or 0.7%, to 12,900.82, with 23 of its 30 components trading higher, among them Wal-Mart , up 1%.
Among blue-chip decliners, American International Group Inc. dropped 0.9% after a Standard & Poor's equity analyst slashed her forecasts for AIG ahead of the giant insurer's first-quarter results, due after the closing bell.
"On the negative side, we're staring down the barrel of stubbornly high energy prices," said Hogan.
But Thursday's trade offered a bit of relief on the energy front, with crude-oil futures edging lower, although still in record territory amid ongoing global supply concerns. Crude for June delivery was recently down 69 cents to $122.84 a barrel on the New York Mercantile Exchange. .
The S&P 500 index gained 9.19 points, or 0.7%, to 1,401.76, with materials leading its rising sectors, up 1.5%, followed by energy, ahead 1%, and then industrials, ahead 0.8%.
S&P sectors posting losses included financials, off 0.4%, and consumer discretionary, down 0.3%.
The Nasdaq Composite climbed 23.28 points, or 1%, to 2,461.77.
Early economic data also bolstered the equities market, with the number of laid off workers filing for benefits falling by 18,000 to 365,000 last week, the government said.
"Continuing claims have budged very little in the last few weeks indicating that jobs aren't as plentiful as before. This negative trend in employment will likely continue through the end of the year. Not bad, could always be better," said Kevin Giddis, managing director, Morgan Keegan & Co. Inc.
All about oil
Stocks fell sharply on Wednesday, with the Dow losing more than 200 points, as oil futures surged past $123 a barrel.
On Thursday, the retail sector was in the spotlight with retailers' sales in April rebounding from a downbeat March, boosted by warmer weather in the first half of the month and a calendar shift in Easter that resulted in an extra selling day.
Consumers boosted purchases of groceries and other necessities, while a tighter hold on wallets led to cautious spending in discretionary items, yielding mixed results for apparel retailers.
Wal-Mart and Costco Wholesale Corp. both exceeded estimates as shoppers bought groceries, pharmaceutical items and loaded up on gasoline at Wal-Mart's Sam's Club and Costco. These warehouse stores sell fuel cheaper than other retailers, a lure as oil prices hit new highs.
"I would think these stores and these stocks will continue to benefit through the summer," said Michael Farr, president of Farr Miller & Washington. .
In other retail results, Pacific Sunwear of California gained, recently up 0.3%, after its sales rose a smaller-than-forecast 4%, with the retailer expecting a loss for the first quarter.
Best Buy Co. Inc. fell 2.2% after saying it's going to pay $2.1 billion for half of Carphone Warehouse's stores in Europe.
Unilever PLC jumped 6% after reporting a better-than-forecast 34% profit rise, with the Skippy peanut-butter producer upping its annual sales outlook.
Toyota Motor Corp. fell 3.8% after reporting a 28% profit fall and said year-to-April profits would fall due to a weak dollar and a tough U.S. auto market.
Crocs Inc. jumped 17.3% as the loss-making footwear producer expects 2008 results to come in ahead of analyst estimates.
Overseas, the Bank of England held off on backto-back rate cuts amid inflation worries. The European Central Bank is widely forecast to hold rates at 4%.
Most European stock markets ended lower in the face of the inflation concerns.
By Kate Gibson