Stocks Climb for Fifth Straight Day

Also late Thursday, KB Home(KBH Quote) reported second-quarter earnings of $181.5 million, or $2.06 a share, compared with $102.1 million, or $1.20 a share, a year ago. The consensus was for earnings of $1.78 a share. The homebuilder said revenue rose to $2.1 billion from $1.6 billion last year. KB Home also raised its earnings outlook for 2005. The stock rose $5, or 6.9%, to $77.25.

Brokerage Smith Barney lifted its ratings on KB Home as well as others in the homebuilding sector. The firm raised Hovnanian(HOV Quote), Meritage Homes(MTH Quote), Beazer Homes(BZH Quote), Pulte(PHM Quote) and Ryland(RYL Quote) to buy from hold on the belief that the homebuilding group will benefit from a renewed wave of upward earnings revisions.

In other ratings news, Wachovia Securities downgraded shares of Goldman Sachs(GS Quote) to market perform from outperform, citing earnings volatility. On Thursday, the investment bank reported second-quarter earnings of $1.71 a share, falling short of analysts' expectations of $1.87 a share.

UBS, however, raised its 2006 earnings estimate for Goldman Sachs, on the basis of positive remarks about the company's investment-banking pipeline. UBS now expects 2006 earnings to be $9.40 a share, up from $9.20 a share. The firm also reiterated its 2005 estimate of $9.35 a share. Goldman Sachs gained $1.15, or 1.1%, to $103.80.

Piper Jaffray cut Archipelago(AX Quote) to underperform from market perform, saying shares have risen too fast after the company's announced merger plans with the New York Stock Exchange. In April, the NYSE announced the deal to acquire Archipelago, ending the Big Board's 212-year history as a privately owned institution. Archipelago lost 77 cents, or 1.9%, to $39.53.

Overseas markets were higher, with London's FTSE 100 up 0.6% to 5077 and Germany's Xetra DAX adding 0.5% to 4604. In Asia, Japan's Nikkei rose 0.9% at 11,514, while Hong Kong's Hang Seng was 0.6% higher at 13,912.

To view Aaron Task's video take on today's market, click here.