By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rose on Thursday, with the S&P 500 rebounding from its longest stretch of losses this year, as worries about a government shutdown eased.
After a five-session losing streak, the Dow Jones Industrial Average (DJI) rallied as much as 113.9 points, and lately held a gain of 92 points, or 0.6%, to 15,365.26. Also up after a five-session drop, the S&P 500 index (SPX) climbed 9.16 points, or 0.5%, to 1,701.93, with telecommunications pacing gains that extended to all 10 of its major industry sectors.
"I think the debt ceiling is raised; I don't think we're going to see a default," said Chris Gaffney, senior vice president, senior market strategist at EverBank Wealth Management.
The Senate on Wednesday moved toward advancing a bill that would keep the government open after Monday without wiping out funding from the health care law. Also Wednesday, Treasury Secretary Jacob Lew told Congress the Treasury will only have $30 billion in cash by Oct. 17, putting the nation on the brink of default.
Bed Bath & Beyond Inc. (BBBY) rose 4.8% after hiking the low end of its 2013 earnings outlook. J.C. Penney Co. (JCP) fell 1.1% after Reuters cited unidentified people familiar with the matter in reporting the retailer could look to raise $750 million to $1 billion by selling new shares. Hertz Global Holdings Inc. (HTZ) dropped 12% after trimming its outlook.
The Nasdaq Composite (RIXF) gained 31.79 points, or 0.9%, to 3,792.89.
Advancers ran ahead of decliners nearly 2-to-1 on the New York Stock Exchange, where 117 million shares traded by 10:30 a.m. Eastern. Composite volume neared 570 million.
Stocks extended gains after a report from mortgage-buyer Freddie Mac put the average 30-year fixed-rate mortgage at 4.32% this week, with the rate the lowest since August.
With mortgage rates backing off, "we'll likely see any fence sitter get off to take advantage of the drop because it likely won't last," emailed Peter Boockvar, chief market strategist at the Lindsey Group LLC, of expectations that potential home buyers would move ahead of an anticipated rise in interest rates.
Other economic reports included the National Association of Realtors reporting sales contracts on homes falling 1.6% in August, weekly jobless-claims data exceeding expectations, and the economy growing at an unrevised 2.5% pace last quarter.
The Labor Department reported the number of new applications for unemployment benefits fell by 5,000 to 305,000 last week, with the number slightly below what economists had expected, but still above 300,000, "which is still an important line; the labor sector isn't going as well as we would like to see," said Gaffney.
Separate data had the U.S. economy growing an unrevised 2.5% in the second quarter, less than the 2.7% projected by economists survey by MarketWatch. But from Gaffney's perspective the number "was actually good, we thought it could tick to 2% or even below 2%."
A number of Fed officials speak on Thursday. In Sweden, Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said the U.S. central bank will "face risks as it pursues its 'exit strategy' from recent unconventional policies." Lacker is a nonvoting member of the Fed's policy-making committee.
Participating on a panel in Germany, Fed Gov. Jeremy Stein, a voting member, said the U.S. central bank should develop a methodical approach to tapering by linking reduced-asset purchases to the unemployment rate.
Nonvoting member and Minneapolis Fed President Narayana Kocherlakota will give a talk on monetary-policy strategy in Houghton, Mich., in the afternoon, while Kansas City Fed President Esther George, a voting member, gives a speech on the U.S. economy in Denver in the evening.
-Kate Gibson; 415-439-6400; AskNewswires@dowjones.com
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(END) Dow Jones Newswires
09-26-13 1048ETCopyright (c) 2013 Dow Jones & Company, Inc.
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