NEW YORK — Stocks had their biggest rally in two weeks Thursday as earnings and economic reports reassured investors that the recovery, while uncertain, is continuing.
The Dow Jones industrial average rose 201 points after Caterpillar Inc., UPS Inc. and other companies beat analysts’ forecasts. A better-than-expected report on housing and encouraging signs of growth in Europe added to the upbeat mood.
But investors might be ready to sell again when trading resumes today. After the close of regular trading, Amazon.com Inc. issued a report that fell short of expectations. Its stock fell in after-hours trading. If the market gives back gains today, it would follow its pattern of falling on disappointments in what so far has been a mixed earnings season.
For the moment, though, investors had reasons to be buying Thursday. 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.
Chris Hobart, founder of Hobart Financial Group in Charlotte, N.C., said the outlooks are especially important because if companies expect to grow, they’ll need to hire again.
If improved forecasts 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.
The Dow rose 201.77, or 2 percent, to 10,322.30. That was the Dow’s biggest advance since it rose 274 points July 7.
The Standard & Poor’s500 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.
About six stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 4.9 billion shares.
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. News of corporate deals also lifted shares.
Overseas, Britain’s FTSE 100 rose 1.9 percent, Germany’s DAX index gained 2.5 percent and France’s CAC-40 rose 3.1 percent. In Japan, where trading ends before it begins in the U.S., the Nikkei stock average fell 0.6 percent.
Bond prices dipped as investors jumped back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.94 percent from 2.88 percent late Wednesday.
Business, Pages 26 on 07/23/2010