Stocks trade higher; Dow, S&P 500 set records


NEW YORK -- Stocks rose and bond prices fell Thursday after Wal-Mart Stores Inc. raised its profit forecast and several other retailers managed to put up better-than-expected sales.

While overall monthly sales reports were sluggish, Wall Street appeared relieved that some retailers were able to extract stronger sales even as consumers face uncertainty about the economy, higher fuel prices and, in large swaths of the country, unseasonably warm weather.

Wall Street views robust consumer spending, which accounts for about two-thirds of economic activity, as crucial for holding up the economy.

The latest government economic reports also appeared to please investors. New readings showed a steeper-than-expected drop in the U.S. trade deficit and a decline in weekly unemployment claims.

Wall Street's gains Thursday vaulted the Dow Jones industrial average and the Standard & Poor's 500 index into record trading highs early in Thursday's session.

In midmorning trading, the Dow rose 77.87, or 0.55%, to 14,156.56, also set a new trading high of 14,171.52. The blue chip index, after finishing lower Wednesday, also passed a trading high of 14,166.97 and record close of 14,164.53, set Tuesday.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 8.09, or 0.52%, to 1,570.56 to a new trading high of 1,572.01; its previous trading high was 1,565.42. It also surpassed the record close of 1,565.15 it had on Tuesday

The Nasdaq composite index rose 17.94, or 0.64%, to 2,829.55.

Bonds fell sharply following the economic data, with the yield on the benchmark 10-year Treasury note rising to 4.70% from 4.65% late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 95 cents to $82.25 on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average closed up 1.64% after a rating agency upgraded the country's debt. Stocks in Europe also rose amid upbeat sentiment about access to credit and after Telefonica SA, the Spanish telecommunications company, said it would pay a one euro dividend. In afternoon trading, Britain's FTSE 100 rose 1.17%, Germany's DAX index advanced 0.65%, and France's CAC-40 rose 0.41%.

In economic news, the U.S. trade deficit fell to its lowest level in seven months -- a much better reading than Wall Street expected -- amid record sales of American products. Several high-profile recalls dented imports from China.

The Commerce Department said the deficit declined to $57.6 billion in August, down 2.4% from the July imbalance.

Exports rose 0.4% to a record $138.3 billion, while imports dropped by 0.4% to $195.9 billion.

A weakening dollar makes U.S. exports more competitive abroad.

Meanwhile, the number of newly laid off workers seeking unemployment benefits dropped last week, a better showing than Wall Street had expected. Labor Department figures showed applications for jobless benefits fell by 12,000 to 308,000 last week, rather than staying flat as had been expected.

While overall retail sales reports were sluggish, Wall Street cheered Wal-Mart's announcement. The world's largest retailer raised its third-quarter profit forecast even after reporting its same-store sales, or sales at stores open at least a year, rose a weaker-than-expected 1.4% in September.

Wal-Mart, the biggest advancer among the 30 stocks that make up the Dow industrials, jumped $1.66, or 3.6%, to $47.25.

TJX Companies Inc. rose $1.37, or 4.6%, to $31.04 after the parent of the T.J. Maxx and Marshalls chains turned in a 2% increase in its September same-store sales.

PepsiCo, the world's second-largest soft drink maker, reported its third-quarter earnings rose 17% amid double-digit growth in international sales. The stock, which is up nearly 20% for the year, fell 77 cents to $72.83.

Medtronic Inc. rose 36 cents to $57.21 after its drug-coated stent Endeavor moved past a big regulatory hurdle as a panel of government experts recommended the Food and Drug Administration approve the artery-opening device.

Advancing issues outnumbered decliners by about 5 to 2 on the New York Stock Exchange, where volume came to 256.6 million shares.

The Russell 2000 index of smaller companies rose 3.82, or 0.45%, to 849.01.