US stocks edge higher in afternoon trading

ALEX VEIGA AP Business Writer Published:

Stocks were on track to finish higher Thursday afternoon for the second day in a row as investors drew encouragement from reports on Chinese manufacturing, U.S. home sales and some positive earnings from Best Buy, Dollar Tree and other retailers.

KEEPING SCORE: The Standard & Poor's 500 index gained seven points, or 0.4 percent, to 1,895 as of 3 p.m. Eastern Time. The Dow Jones industrial average rose 26 points, or 0.2 percent, to 16,559. The Nasdaq composite added 29 points, or 0.7 percent, to 4,160.

SLOWING SLOWDOWN: A survey from HSBC suggested the slowdown in China's economy is flattening. Its China manufacturing index, which is based on a survey of factory purchasing managers, rose to 49.7 in May from 48.1 in April. Numbers above 50 on the 100-point scale indicate expansion. May's reading was the best in five months, showing that China's economy is stabilizing after stimulus measures.

"A revival in China is good for emerging markets, good for global growth and therefore good for stocks and not so hot for bonds," noted Krishna Memani, chief investment officer at Oppenheimer Funds.

RETAILER RALLY: Best Buy added 54 cents, or 2.1 percent, to $25.89 after its earnings came in well ahead of what investors were looking for. Dollar Tree gained $3.41, or 6.8 percent, to $53.42 after reporting that its income rose nearly 4 percent in the latest quarter as shoppers spent more at its discount stores. Dollar Tree's gain was the biggest in the S&P 500 index. L Brands, which owns store brands such as Bath and Body Works and Victoria's Secret, rose 64 cents, or 1.1 percent, to $56.50.

HOUSING BUMP: The National Association of Realtors reported that sales of existing U.S. homes rebounded slightly in April, but the pace of buying remained below last year's level. Sales rose 1.3 percent from March to a seasonally adjusted annual rate of 4.65 million. Purchases of homes over the past 12 months have dropped 6.8 percent. The report helped drive shares in homebuilders higher. D.R. Horton lead the pack, rising 64 cents, or 2.9 percent, to $22.76.

MARKET DEBUT: China's No. 2 online retailer,, made its debut on the Nasdaq, beating Chinese rival Alibaba to American stock market. Its stock jumped $1.90, or 10 percent, to $20.90. The two other Chinese Internet firms didn't do as well. Online marketplace fell $3, or 7.2 percent, to $38.73, while Weibo sank $1.99, or 9.8 percent, to $18.26.

NO LOVE: Sears Holdings reported a wider quarterly loss as sales slumped. Sears has been cutting costs, reducing inventory and selling assets as it tries to return to profitability. Revenue fell, partly because the company has fewer stores. Sears, which also operates Kmart, was down for much of the day, but recovered by late afternoon. It stock rose 75 cents, or 2.1 percent, to $37.31.

SECTOR CLOSE-UP: Nine of the 10 sectors in the S&P rose, with utilities posting the biggest gain. Consumer staples declined.

UP IN SMOKE: Lorillard sank $2.17, or 3.5 percent, to $60.45 following published reports that the tobacco seller could tie up with Reynolds American, creating the country's second-largest producer.

TEAM PHARMA: Several pharmaceutical stocks were among the biggest gainers in the S&P 500. Alexion Pharmaceuticals jumped $4.80, or 3.2 percent, to $161.50, while Regeneron Pharmaceuticals added $9.53, or 3.3 percent, to $300.50. Vertex Pharmaceuticals rose $3.66, or 5.5 percent, to $70.81.

ASIA: Thailand's currency sank Thursday after the country's military seized power in a coup. The Thai army chief's announcement came after the local stock market had ended its trading day with a slight gain. The Thai stock exchange said trading would open as usual on Friday.

In Japan, the Nikkei surged more than 2 percent, helped by the optimistic report on China's economy as well as minutes from the U.S. Federal Reserve's last major meeting, which suggested the central bank was in no hurry to hike interest rates.

JOBS WATCH: The Labor Department reported that applications for unemployment benefits increased last week to a seasonally adjusted 326,000. A less volatile measure of unemployment claims, the four-week average, fell to 322,500. The average reached a seven-year low of 312,000 last month.

OTHER MARKETS: The yield on the 10-year Treasury note rose to 2.56 percent from 2.54 percent late Wednesday. Gold jumped $6.90 to $1,295 an ounce.