Stocks Jump for Second Straight Session

The Dow posts another triple-digit gain following better-than-expected chain-store sales and a surprise increase in pending home sales. Alix Steel has The Real Story.
By Melinda Peer ,

NEW YORK (

TheStreet

) -- The

Dow Jones Industrial Average

finished with a triple-digit gain for the second day in a row on Thursday, as better-than-expected chain-store sales and a jump in pending home sales bolstered confidence in the U.S. economic recovery.

Liquidity actions by the European Central Bank also helped to abate concerns over the eurozone debt crisis.

The Dow gained 107 points, or 0.9%, to close at 11,362. The

S&P 500

tacked on 15 points, or 1.3%, to settle at 1221, while the

Nasdaq Composite

rose 29 points, or 1.2%, to 2579.

Conglomerates, capital goods and basic materials were among the strongest sectors in the broad market. Within the Dow,

Home Depot

(HD) - Get Report

,

Alcoa

(AA) - Get Report

,

Bank of America

(BAC) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

posted the best percentage gains.

Financials were also a bright spot after Goldman Sachs lifted the sector to "overweight" on a better economic outlook.

"Stronger economic growth, higher equity prices, and a more supportive interest-rate environment are positive for many subsectors of financials," the report said. The

SPDR Select Sector Financials ETF

(XLF) - Get Report

gained 2.5% to $15.12.

Kraft Foods

(KFT)

,

Cisco Systems

(CSCO) - Get Report

and

Pfizer

(PFE) - Get Report

were the only blue chips to finish in negative territory.

Homebuilder and banking stocks led the S&P 500 higher. Pending home sales rose 10.4% in October after falling 1.8% in September. Economists had expected pending home sales to remain flat, according to Briefing.com.

Toll Brothers

(TOL) - Get Report

surged 2.2% to $18.87

after it beat analysts' expectations..

Lennar

(LEN) - Get Report

,

Pulte Holmes

(PHM) - Get Report

and

D.R. Horton

(DHI) - Get Report

jumped 7%, 3.2% and 3.7%, respectively.

"The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011," said Lawrence Yun, National Association of Realtors chief economist, who added excellent housing affordability conditions are drawing homebuyers.

"Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability," he said. "Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80% and 90% of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed."

The ECB announced Thursday it was keeping a

key lending rate steady

at a record low 1% and said it would extend long-term liquidity tenders that had been scheduled to expire in early 2011. The governing council also decided to offer three-month refinancing options.

Speaking at a press conference Thursday following the ECB meeting in Frankfurt, ECB President Jean-Claude Trichet said, "Overall, the current monetary policy stance remains accommodative. The stance, the provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non-standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature."

Markets initially appeared disappointed that the ECB didn't step up purchases of government bonds, as had been expected. U.S. futures came off earlier highs during Trichet's press conference, and the

euro lost ground against the dollar. Sentiment turned around, however, as the U.S. and European markets showed strong gains and the euro rose to $1.3212 from $1.3137.

The FTSE in London surged to close 2.2% higher, while the DAX in Frankfurt gained 1.3%. In Asia, Hong Kong's Hang Seng added 0.9%, and Japan's Nikkei jumped 1.8%.

The Labor Department said

initial jobless claims rose to 436,000 in the week ended Nov.27, from 410,000 claims, previously. The level was higher than the 422,000 initial claims that economists had been expecting, according to Briefing.com.

The report comes ahead of the Labor Department's employment report on Friday. Private payrolls are expected to rise by 140,000 according to

Briefing.com

.

November same-store sales reports, which include results from the "Black Friday" weekend, largely came in ahead of estimates. Shares of

Abercrombie and & Fitch

(ANF) - Get Report

jumped 11.1% to $56.02 as the retailer said same-store sales rose 10.5% to $55.74, outpacing the increase of 6.8% that analysts expected.

Gap

(GPS) - Get Report

,

Macy's

(M) - Get Report

and

Target

(TGT) - Get Report

also all issued better-than-expected same-store sales gains in November. After a strong run up to the holiday season, Gap's stock was up 0.5% to $21.67 and shares of Macy's slipped 1.1% to $25.54. Target's stock was up by 2.8% to $59.65.

Warehouse retailer

Costco

(COST) - Get Report

said November same-store sales rose 9%, which was better than the increase of 6.2% that analysts had anticipated, while sales gains at

BJ's Wholesale Club

(BJ) - Get Report

were just shy of expectations for a 3.9% uptick. Costco's stock ticked higher by1% to $69.01 and BJ's stock finished ahead by 0.7% at $47.54.

Shares of

PepsiCo (PEP) - Get Report

were down by 0.7% to $65.20 on news that it agreed to acquire 66% of

OAO Wimm-Bill-Dann

(WBD)

, a Russian dairy and fruit-juice company, for $3.8 billion. Wimm-Bill-Dann shares soared 28% to close at $31.34.

In commodity markets, the January crude oil contract gained $1.25, or 1.4%, to settle at $88 a barrel. The most actively traded February gold contract added $1.27, or 0.09%, to settle at $1,389.30 an ounce.

The dollar traded lower against a basket of currencies with the dollar index down by 0.7%, and the benchmark 10-year Treasury note weakened 9/32, lifting the yield to 2.998%.

.

--Written by Melinda Peer and Shanthi Bharatwaj in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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