US stocks surge on upbeat earnings, forecasts

NEW YORK (AP) — Stocks had their biggest rally in two weeks Thursday as earnings and economic reports reassured investors that the economy is continuing its recovery.

The Dow rose 201.77, or two percent, to 10,322.30. The Standard & Poor’s 500 index rose 24.08, or 2.3 percent, to 1,093.67, while the Nasdaq composite index rose 58.56, or 2.7 percent, to 2,245.89.

Only 397 stocks fell on the New York Stock Exchange, while 2,675 rose. Volume came to 1.2 billion shares.

The Dow Jones industrial average rose 201 points after strong earnings from Caterpillar Inc., UPS Inc. and other companies revived investors’ optimism about the recovery. A better than expected report on housing and encouraging signs of growth in Europe added to the upbeat mood.

Investors who have been mostly selling on disappointing economic and earnings numbers had, at least for the moment, reasons to be buying. Caterpillar said its orders are growing and production will pick up in the second half of the year. UPS raised its outlook because of spending by businesses. Caterpillar’s stock rose 2.1 percent, while UPS gained 5.9 percent.

Chris Hobart, founder of Hobart Financial Group in Charlotte, North Carolina, said the outlooks are especially important because if companies expect to grow, that might get them to ramp up hiring.

If improved outlooks lead to jobs growth, “then this can be better than a good quarter or good second half, (it can mean) we’ve got a good economy,” Hobart said.

A report on the housing market, while still showing a slowdown, was reassuring because it wasn’t as bad as investors expected. The National Association of Realtors said sales of previously occupied homes fell to an annual rate of 5.37 million in June from 5.66 million a month earlier. Economists forecast the sales rate to fall to 5.18 million.

Traders largely wrote off a jump in the number of people seeking unemployment benefits for the first time. The increase was likely skewed by seasonal factors. Instead, investors focused on earnings from a broad range of companies that showed businesses aren’t seeing a slowdown in the recovery.