Stocks Surge After Roubini Nod

Updated with Nouriel Roubini statement.

The major indices advanced about 1% Thursday after reportedly bullish comments from noted economist Nouriel Roubini inspired afternoon buying -- but after the market close he said not so fast.

The Dow Jones Industrial Average rose 95.61 points, or 1.1%, to 8711.82, while the S&P 500 added 8.06 points, or 0.9%, to 940.74. The Nasdaq Composite added 22.13 points, or 1.2%, to 1885.03.

American Express ( AXP) rose 3.9% to lead the Dow. It was followed by IBM ( IBM), up 3.2%, and Walt Disney ( DIS), which also climbed 3% after an analyst upgrade.

IBM and Google ( GOOG) both beat profit estimates with their quarterly reports after the close.

Helping to fuel an afternoon turnaround were reports that Roubini said the worst of the financial crisis is over and predicted the recession will end this year. However, Roubini issued a statement after the market close saying his views are no different than in the past and if anything were taken out of context.

Also helping stocks, the National Association of Homebuilders said its homebuilder confidence index rose two points in July to its highest level since September 2008.

Financials were pressured early after small business lender CIT Group ( CIT) said that "there is no appreciable likelihood" of new government support over the near term. (CIT shares plummeted 75% to 41 cents.) That news initially kept a lid on the enthusiasm that may have come from a better than expected earnings report out of JPMorgan Chase, the second big bank to surprise Wall Street this earnings season.

Stocks advanced earlier in the week after earnings surprises from Goldman Sachs ( GS) and Intel ( INTC), some better-than-expected economic data and an improved forecast for economic shrinkage from the Federal Open Market Committee.

Its likely still too early to say that sentiment has changed, although there are least inklings to support it, says Brett D'Arcy, chief investment officer for CBIZ Wealth Management.

"I think you what you saw yesterday was a lot of money coming in from the sidelines, and that money was waiting for some catalyst -- and the Intel release was that catalyst" says D'Arcy. "So I can't say that this is going to be the beginning of a big change, but there was an increase in activity."

(Click below to hear my entire interview with D'Arcy, including his thoughts on tech and energy.)

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Market Q&A

One bit of improved economic news came from the Department of Labor, which said early Thursday that there were 522,000 new jobless claims last week, down from 569,000 the week prior and less than the 553,000 expected. That data followed a batch of earnings, some better and some worse than expected.

 Market Roundup

Among them, Nokia ( NOK) posted a 66% decline in second-quarter profit and said it no longer expects to gain market share in the second half of the year. Its shares fell 14.2% to $13.46.

Slumping mobile-phone sales also hurt handset maker Sony Ericsson. The Ericsson ( ERIC) and Sony ( SNE) joint venture reported its fourth consecutive quarterly loss after sales fell 39%. The joint venture said it has shed around 2,350 jobs. Those stocks were down 0.2% and 1.7%, respectively.

In other earnings, Swiss drugmaker Novartis ( NVS) said second-quarter earnings fell 10% on currency changes and higher financing costs, but reaffirmed its outlook for "strong underlying momentum" in 2009, with net sales rising at a mid-single-digit rate in local currencies. Novartis shares rose 2.6% to $42.

Bank of America ( BAC) and Citigroup ( C) are slated for Friday.

In other news, former Treasury Secretary Henry Paulson testified on Thursday on the government's involvement in the Bank of America/Merrill Lynch merger at a hearing before the Committee on Oversight and Government Reform. Paulson, who said that in his view the interests of the nation and Bank of America were aligned with respect to the closing of the deal, faced sharp criticism on his use of power and amount of disclosure.

"While all of this was going on, the American people, investors and the Congress were kept in the dark," said Rep. Edolphus Towns (D., N.Y.).

Stocks overseas were mostly higher. In Europe, London's FTSE 100 and the DAX in Frankfurt advanced 0.4% and 0.6%, respectively. In Asia, the Nikkei in Japan and Hang Seng in Hong Kong rose 0.08% and 2.1%, respectively.

As for commodities, crude oil futures rose 48 cents to settle at $62.02, while gold lost $4 to $935.40 an ounce.

The dollar was weaker vs. the yen but gaining ground against the pound and eduro, while longer-dated Treasuries were rising in price, falling in yield. The 10-year was up 11/32 to yield 3.55%, while the 30-year rose 25/32, yielding 4.44%.

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