Stock Market News for September 3, 2010

Stocks added to the gains from the previous session after better-than-expected retail and housing numbers helped boost confidence in the economy. However, caution ahead of today’s monthly payroll data restrained traders from making big moves. As traders chose to play it safe, volume dipped sharply.

The Dow Jones industrial average rose 51 points, or 0.5%, to 10,320.10. The blue-chip average had jumped 254 points on Wednesday on better-than-expected manufacturing reports in China and the U.S. The Standard & Poor's 500 index advanced 10 points, or 0.9%, to 1,090.10, while the Nasdaq composite index climbed 23.17, or 1.1%, to 2,200.01. On the New York Stock Exchange, about two stocks advanced in price for everyone that fell.

Since employment, housing and consumer spending have been the areas that have had the greatest bearing on investors’ sentiments, a better-than-expected reading on these fronts helped relieve concerns that the pace of the recovery is faltering. A slightly less than expected rise in factory orders failed to stem the gains, with the miss largely attributed to prior months' revisions.

Gains were broad based, with 24 of the 30 DJIA components closing the day in the green. Leading the gainers were Boeing (NYSE:BA - Analyst Report), 3M (NYSE:MMM - Analyst Report) and Home Depot (NYSE:HD - Analyst Report). All but one of the S&P 500 industry sectors managed gains on the day.

Meanwhile, the European Central Bank’s decision to keep a key interest rate unchanged was welcomed by investors. Gold prices advanced $5.20 to $1251.50. Treasury prices fell, sending corresponding yields higher. The yield on the 10-year note jumped to 2.63% from 2.58% late Wednesday.

Shares in 3Par (NYSE:PAR) advanced 2.5% to $32.87 after Hewlett-Packard raised its bid for the data storage firm to $33 per share, overtaking Dell’s (NASDAQ:DELL - Analyst Report) $32 per share offer. Burger King (NYSE:BKC), which is being taken private by investment group 3G Capital, soared $4.72, or 25%, to $23.58. The investment group has offered $3.26 billion, or $24 per share, for the fast-food chain.

The housing report showing a surprise rise in July pending home sales strengthened shares in homebuilder companies. Beazer Homes (NYSE:BZH - Snapshot Report) up 7.1%, DR Horton (NYSE:DHI - Analyst Report) up 2.5%, and PulteGroup (NYSE:PHM - Analyst Report) up 2.4%. Home improvement retailers also advanced on the news, with Lowe's (NYSE:LOW - Analyst Report) up 3.3% and Home Depot (NYSE:HD - Analyst Report) rising 2.6%.

Better-than-expected same-store sales number also indicated consumers were slowly beginning to open their wallets. Same-store-sales rose 3.5%, bettering estimates of a 2.8% advance. Retail shares rallied, with BJ Wholesale (NYSE:BJ) up 2.9% and Dollar General (NYSE:DG - Snapshot Report) up 2.4%. Among teen-sellers, American Eagle (NYSE:AEO - Analyst Report) rose 5.5% and Urban Outfitters (NASDAQ:URBN - Analyst Report) 4.5%. Among department stores, Saks (NYSE:SKS - Analyst Report) climbed 10.8% despite its 0.9% sales drop, Nordstrom (NYSE:JWN - Analyst Report) rose 8.1% and Dillard's (NYSE:DDS - Analyst Report) gained 3.5%.

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