Retail, Builders Lift Stocks

Updated with closing prices.

Homebuilding and retail led stocks in New York to their greatest increases of the week on Thursday as corporate news, a Treasury auction and the Federal Reserve chairman's testimony in Washington helped mitigate jitters over economic data.

The Dow Jones Industrial Average rose 172.54 points, or 2.1%, to 8472.40, while the S&P 500 climbed 19.32 points, or 2.1%, to 920.26. The Nasdaq Composite added 37.20 points, or 2.1%, to 1829.54.

Alcoa(AA Quote) and American Express (HD Quote) had the greatest percentage increases on the Dow, rising 5% and 6.6%, respectively.

Outside of the index, homebuilder Lennar(LEN Quote) reported a wider-than-expected second-quarter loss but also said orders rose 63%, inventories fell 53%, and cancellations improved over the prior quarter. Shares rose 17.5%, to $9.19, helping to prop up other homebuilders and the S&P Homebuilders Select Industry Index, which rose 5.1%.

Also, Bed Bath & Beyond(BBB Quote) shares added 9.5% to $31.08 after the company posted an unexpected profit. That, paired with news that Dress Barn (DRBN Quote) will acquire Tween Brands(TWB Quote) -- those stocks rose 8.8% and 27.99%, respectively -- helped to stoke the retail sector, with the S&P Retail Index adding 3.8%.

Early on, the market had economic data -- some better and some worse than expected -- to digest. The Department of Labor reported that new jobless claims rose unexpectedly by 15,000 to 627,000 last week, vs. expectations for 600,000. Meanwhile, the Department of Commerce said the economy contracted by 5.5% in the first quarter, slightly better than previous estimates.

"The jobs numbers keep looking kind of poor, but when you look at the leading indicators released last week and the durable goods data from earlier in the week, they do show signs of improving strength in the economy," says Ryan Detrick, technical strategist at Schaeffer's Investment Research. "But the economy still needs to show that the rally is happening for the right reason."