Stocks surge on retail sales reports

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NEW YORK -- Stocks surged Thursday, carrying the Dow Jones industrials into record territory as investors gleaned positive consumer spending trends from retailers' June sales reports.

A new bid for aluminum maker Alcan Inc. added to the upbeat mood on Wall Street, which drove the Dow up more than 100 points to a new intraday high.

Though retail sales on the whole appeared to be crimped last month by higher gasoline prices and a tepid housing market, a few reports beat Street expectations -- notably that of Wal-Mart Stores Inc., the world's largest retailer, which posted a better-than-expected 2.4% jump in sales at stores open at least a year.

Wal-Mart, one of the 30 companies that make up the Dow Jones industrial average, helped ease some investors' worries about the health of the consumer ahead of the Commerce Department's Friday report on U.S. retail sales.

Meanwhile, the stock market got an additional boost after mining company Rio Tinto offered to buy Canadian aluminum company Alcan for $38.1 billion. The offer topped a bid from Alcoa Inc. that Alcan's board rejected in May, and Alcoa is considering whether to make another bid.

In mid-morning trading, the Dow Jones industrial average rose 116.81, or 0.86%, to 13,694.68, after climbing to 13,697.77, an intraday record. The Dow's record close is 13,676.32, set June 4.

Broader stock indicators also surged higher.

The Standard & Poor's 500 index rose 11.00, or 0.72%, to 1,529.76, nearing its record close of 1,539.18 reached June 4.

The Nasdaq composite index rose 16.22, or 0.61%, to 2,668.01.

The 10-year Treasury note's yield fell to 5.08%, down from 5.09% late Wednesday, adding to stock investors' glee. The dollar was generally lower against other major currencies, dropping to a fresh record low versus the euro and a new 26-year low against the British pound. Gold prices rose.

Light, sweet crude rose 90 cents to $73.46 per barrel on the New York Mercantile Exchange.

Alcan and Alcoa shares jumped Thursday after miner Rio Tinto countered Alcoa's hostile bid for Alcan with a higher offer.

Alcan rose $8.39, or 9.4%, to $97.99, after hitting a 52-week high of $98.21. Alcoa shares rose $2.52 or 5.9%, to $45.95, after hitting a year-high of $46.15, possibly signaling investors' relief that an Alcoa-Alcan combination would not go through.

Among the retailers surprising Wall Street, J.C. Penney Co. posted a narrower-than-expected decline in its June same-store sales and reiterated its second-quarter profit forecast to match analyst expectations. Penney rose $2.77, or 3.9%, to $73.93.

American Eagle, a mall-based youth clothing retailer, saw its June same-store sales jump 8%, nearly double the increase the Street expected. American Eagle rose $1.56, or 6%, to $27.59.

Not all retailers had good news to report. Macy's, for one, fell $1.40, or 3.4%, to $39.01 after releasing same-store sales that were well below forecasts and slashing its second-quarter guidance.

But overall, sales were better than investors had been bracing for. Analysts have been keeping their expectations for second-quarter earnings low -- especially after profit warnings this week from cell phone maker Motorola Inc., and retailers Home Depot Inc. and Sears Holdings Corp.

In economic data, the Commerce Department reported Thursday that the international trade balance widened to $60.04 billion in May, as expected, from $58.5 billion in April.

Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where volume came to 269.6 million shares.

The Russell 2000 index of smaller companies rose 8.01, or 0.95%, to 847.98.

Overseas, Japan's Nikkei stock average fell 0.36%. In afternoon trading, Britain's FTSE 100 rose 0.82%, Germany's DAX index advanced 0.91%, and France's CAC-40 rose 1.20%.
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