US stocks rose in thin trade yesterday as retailers’ earnings and a report showing a slight improvement in private employment boosted optimism ahead of Friday’s payrolls report.
Priceline.com soared 22 per cent to $281.30 on its stronger-than-expected quarterly results and outlook, suggesting consumers are opening their wallets to spend on travel.
Traders also noted many stocks have low valuations, with the S&P 500 trading at a forward price-to-earnings ratio of 12.6 versus 14.6 at the start of the year.
“People still have a lot of concerns about economic growth right now and people are thinking the economy is slowing, and these numbers haven’t been strong enough to disabuse anyone of that opinion,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
“On the other hand, stocks continue to be very inexpensive and if you believe 2011 earnings estimates, they are very inexpensive.”
Coach climbed 5.9 per cent to $39.30 (£24.73) after the leather goods maker posted fourth-quarter results that topped Wall Street’s expectations. The S&P Retail index gained 2.2 per cent.
Data from the Institute for Supply Management showed the services sector grew at a faster pace than expected in July. In a separate report, payroll-processing company ADP said private employers added more jobs in July than forecast.
Friday’s government report on jobs is expected to show a drop of 65,000 in July as Census jobs dried up.
The Dow Jones industrial average gained 44.05 points, or 0.41 per cent, to 10,680.43. The Standard & Poor’s 500 Index added 6.78 points, or 0.61 per cent, to 1,127.24. The Nasdaq Composite Index advanced 20.05 points, or 0.88 per cent, to 2,303.57.
Priceline was the top performer in both the S&P 500 and the Nasdaq 100.
With 80 per cent of the S&P 500 companies having reported quarterly results, estimated and reported earnings growth stands at 37.3 per cent for the previous quarter, up from an estimate of 27.4 per cent a month ago, according to Thomson Reuters Proprietary Research.
Barnes & Noble surged 19.2 per cent to $15.31 after the number one US bookstore chain put itself up for sale as business suffers in the high-stakes battle for a leading role in the digital books market.
Shares of industry giant Amazon.com, which sells the Kindle electronic reader and e-books, rose 4.2 per cent to $127.58. Goldman Sachs added 2.1 per cent to $156.41.