Late Push Lifts Stocks Before Jobs Data

(Wall Street Journal) - U.S. stocks mounted a modest afternoon rally to close near the day's highs Thursday as investors awaited monthly jobs data on Friday that will shed more light on the economic recovery.

The Dow Jones Industrial Average finished up 50.33 points, or 0.49 percent, at 10,319.80. The Nasdaq Composite rose 1.06 percent to finish at 2,200.01 while the Standard & Poor's 500-stock index gained 0.91 percent to 1,090.08.

Better-than-expected housing and retail data provided some encouragement to investors, but caution prevailed following Wednesday's big run-up.

If the government's jobs report falls short of already guarded expectations, "that's going to reverse what happened" on Wednesday, when stocks jumped 255 points, said John Canally, economist and investment strategist at LPL Financial.

Canally said that while economic data has come in mixed recently, "the preconditions for a double dip are not here." Strong manufacturing data on Wednesday "puts the burden of proof back on the double dippers," he said.

Retailers led Thursday's small climb after sales for the back-to-school buying month of August largely came in better than expected. Nordstrom jumped 8.1 percent, Limited Brands advanced 6.1 percent and J.C. Penney rose three percent.

Homebuilders were also strong, as investors were heartened by an unexpected increase in pending sales of used homes, a surprising reversal after the index fell two months in a row following the April 30 expiration of a tax credit for buyers.

The Dow traded in a tight range of just over 50 points for most of the day before breaking above, led by consumer discretionary and industrial stocks. More defensive sectors, including utilities, telecommunications and health care stocks, were the three worst performers of the day.

Read more: Wall Street Journal