Verizon, Wal-Mart Lead Dow to Upside

Positive analyst comments on Lehman, better-than-expected retail sales and favorable jobless data are also boosting shares.
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Updated from 12:41 p.m. EDT

Stocks in the U.S. were leaping Thursday as investors snatched up equities amid good news from various slices of the corporate world.

The

Dow Jones Industrial Average

jumped 162 points, or 1.3%, to 12,553, with especially strong support from

Verizon

(VZ) - Get Report

and

Wal-Mart

(WMT) - Get Report

. The

S&P 500

advanced 19 points or 1.4%, at 1396, and the

Nasdaq Composite

gained 35 points, or 1.4%, to 2538.

Still, said Fred Dickson, senior vice president and market strategist with D.A. Davidson, "Really, we still don't see a lot of conviction at this point. It's been a yin-and-yang sort of market. The big-money investors are sitting on the sidelines, slowly nibbling away on the buy side, and then we see short-term profit-taking."

"Our guess is that the underlying trend is up," he continued, "but this is a period of low market conviction and high volatility, and it'll probably stay that way at least until the second-quarter earnings season, or the next

Federal Reserve meeting."

The Fed is next scheduled to convene June 24 and 25.

"I think the data that's going to come out on the second quarter five weeks from now, the

gross domestic product initial data, will in my viewpoint be more important than the first-quarter data," said Bruce Zaro, chief technical strategist with Delta Global Advisors. "It will either confirm that there is light at the end of the tunnel, and that the economy is beginning to crawl back, or refute that theory."

On the corporate front, Verizon more than recovered from a loss in the prior session after confirming it will buy

Alltel

for $28.1 billion via its Verizon Wireless joint venture with

Vodafone

(VOD) - Get Report

, which will make it the largest U.S. mobile carrier. The deal, news of which broke yesterday, comes just months after Alltel was taken private by TPG Capital and

Goldman Sachs

(GS) - Get Report

. Verizon shares were up 6.2% at $39.27.

Retailers were also in focus, with many of the nation's chain stores reporting better-than-expected monthly results. Wal-Mart, the world's biggest store operator, said same-store sales -- those at locations open a year or longer -- climbed 3.9% in May, excluding fuel sales, and its shares were up 2.2%. Total sales advanced 9.8% to $31.04 billion.

TJX

(TJX) - Get Report

, which operates the T.J. Maxx and Homegoods chains, said comps were up 2% in May. That figure jumped 9% at

Costco

(COST) - Get Report

last month, as well. TJX shares added 2.7%, and Costco rose 3.4%.

"It's hard to extrapolate how much of that is due to the Bush administration's helicopter checks," said Dickson, "but some of it is obviously making its way through."

The government's tax-rebate checks, aimed at rousing the sluggish U.S. economy, began shipping out in last month.

"The administration is certainly putting a lot of hope in that," said Zaro. "It doesn't really amount to a lot, relative to the GDP, but I think those little bits and pieces, if you will, are important for the psychology of the market."

Meanwhile,

Target

(TGT) - Get Report

said last month's comparable sales eased 0.7%, and

Gap

(GPS) - Get Report

reported a 14% drop, but shares of both were still trending higher lately.

Limited

(LTD)

saw mixed trading on word of a 6% comps decline.

Over in the financial space, Deutsche Bank's Mike Mayo recommended buying

Lehman Brothers

(LEH)

stock, saying that "worst-case scenarios" are already baked into the price. A Bernstein analyst kept his market perform rating on the stock.

Those moves came a day after Merrill Lynch upgraded Lehman to a positive ranking, and all three analysts have said that Lehman won't fall apart in the same manner that Bear Stearns, now part of

JPMorgan Chase

(JPM) - Get Report

, did three months ago.

Lehman's cash problems led to speculation of a collapse almost immediately following the Bear debacle in March, and earlier this week the stock took a beating on rumors that the brokerage continues to struggle mightily. Recently, however, shares were bouncing 5.2% at $33.04.

In other positive analyst research, United Airlines operator

UAL

(UAUA)

was upgraded by both Lehman and Soleil a day after announcing it will cut down its fleet and lay off about 1,000 more workers by year-end than it had originally planned on doing. Shares surged 11.4%.

Spiking fuel costs and a generally difficult macroeconomic environment have forced several airlines to make similar moves, among them

Continental Airlines

(CAL) - Get Report

, which today said it will cut domestic mainline departures by 16% starting in the September and plans to lay off 3,000 employees. Further, CEO Larry Kellner and president Jeff Smisek said they would cut their salaries for the rest of the year and forego benefits from the 2008 incentive program.

Continental shares were up 6.7%, and

Northwest Airlines

(NWA)

jumped 15.6% on a Lehman upgrade. Yesterday the carrier announced that its traffic had picked up by 4.3% in May.

Also helping keep the mood cheery was the Labor Department, which said that the number of people filing for unemployment benefits slid to 357,000 last week, down by 18,000 from the prior week's upwardly revised figure. Economists were expecting 372,000 claims, on average.

Among commodities, crude oil was rising $2.17 to $124.47 a barrel, and gold futures were dropping $7.30 to $876.50 an ounce. Gas at the pump is now only a penny away from the $4 mark, with the national average reaching a new record of $3.989 a gallon.

The U.S. dollar weakened by 0.8% against the euro at $1.5571, but climbed by that same amount against the yen to fetch 105.86.

Back in analyst calls,

Royal Bank of Scotland

(RBS) - Get Report

was lifted to buy from hold at Citigroup, and teen apparel retailer

Hot Topic

(HOTT)

was upped to outperform at Friedman Billings. RBS shares were up 3.8% on the

NYSE

, and Hot Topic soared 17.1%.

On the other hand, Cowen & Co. downgraded Acrobat software maker

Adobe Systems

(ADBE) - Get Report

to neutral from outperform, pushing the stock down 1.1%. UBS slapped a sell sticker on bulldozer maker

Caterpillar

(CAT) - Get Report

, and

Motorola

(MOT)

was cut to underperform at Oppenheimer. Caterpillar and Motorola were each hugging the flat line.

Treasury prices were sinking. The 10-year note shed 8/32 in price to yield 4.01%, and the 30-year bond was off 6/32 in price, yielding 4.71%.

Foreign markets were mixed. The Hang Seng Index in Hong Kong tacked on 0.6%, but the Nikkei 225 in Tokyo gave up 0.7% overnight, but In Europe, London's FTSE 100 added 0.4% as Germany's Xetra Dax lost 0.3%, and the Paris Cac was down 0.2%.