S&P 500 gains for third day on earnings, economic data

Stocks prices were higher again Wednesday after reports showed better-than-expected economic growth in China and a rebound in new-home construction.

The Dow Jones industrial average gained 162.29 points to 16,424.85. The blue chip index has gained more than 500 points in the past three sessions. The Nasdaq composite index was up 52.06 points to 4,086.23. The Standard & Poor’s 500 Index advanced 19.33 points to 1,862.31, bringing its three-day advance to 2.6 percent.

The weekly report on initial claims for jobless benefits is due out Thursday before the start of trading.

Gold added $3.20 to $1,303.50 an ounce, and oil was up a penny to $103.76 a barrel.

Yahoo! Inc. (Nasdaq: YAHOO) jumped 6.3 percent after sales surged at Alibaba Group Holding Ltd., where it holds a stake.

Bank of America Corp. (NYSE: BAC) retreated 1.6 percent after reporting a quarterly loss.

Google Inc. (Nasdaq: GOOG) sank 5.7 percent in extended trading after the company reported sales that missed estimates.

About 6 billion shares changed hands on U.S. exchanges, the slowest trading in one month.

The S&P 500 erased its loss for the year Wednesday. The gauge had dropped as much as 4 percent from its April 2 record as investors sold Internet and biotechnology stocks, the best performers during the five-year bull market, amid concern valuations had become too expensive before earnings.

Federal Reserve Chair Janet Yellen, speaking to the Economic Club of New York, told investors to pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee’s decisions on the policy rate.

The central bank said the U.S. economy continued to expand in most regions as businesses benefited from a bounce back from harsh winter weather earlier in the year. Eight of 12 Fed districts characterized growth as “modest or moderate,” the Fed said Wednesday in its Beige Book business survey, based on reports gathered before April 7.

Economic data Wednesday showed gains in manufacturing are helping power the U.S. out of the winter doldrums, while homebuilding shows signs of lagging behind.

All 10 main S&P 500 industries advanced Wednesday, with raw-material producers and industrial companies each adding 1.5 percent to pace gains. 3M Co. (NYSE: MMM) and United Technologies Corp. (NYSE: UTX) jumped at least 1.9 percent among the biggest gains in the Dow.

Yahoo rallied 6.3 percent to $36.35. The Web portal posted first-quarter earnings of 38 cents a share, more than the 37 cent average estimate of analysts. Sales excluding some items of $1.09 billion also beat projections. Alibaba reported that net income more than doubled in the last quarter of 2013 and revenue surged 66 percent. Yahoo owns 24 percent of the Chinese e-commerce company.

Southwest Airlines Co. (NYES: LUV) advanced 2.8 percent to $23.54. The largest discount carrier will freeze the size of its jet fleet through 2015, a year longer than CEO Gary Kelly’s stated goal of holding the number of planes — now about 680 — steady through 2014.

Delta Air Lines Inc. (NYSE: DAL) climbed 5.4 percent to $33.62.

Johnson Controls Inc. (NYSE: JCI) rose 1.7 percent to $46.73. The largest U.S. auto-parts maker agreed to buy Air Distribution Technologies for $1.6 billion from the Canada Pension Plan Investment Board.

Moelis & Co. (NYSE: MC) climbed 4.6 percent to $26.15 in its trading debut after raising less than it planned in the first U.S. initial public offering of an investment bank since the financial crisis.

Bank of America declined 1.6 percent to $16.13. The second-largest U.S. lender swung to a quarterly loss after settling claims on mortgage bonds. The first-quarter loss of $276 million compared with a profit of $1.48 billion a year earlier, the lender said.

CSX Corp. (NYSE: CXS) declined 1.8 percent to $27.79. The largest railroad in the eastern U.S. said it expects “modest” earnings growth for 2014 and it’s unclear if 2015 will be “strong enough” to deliver a two-year compound annual growth rate of 10 percent to 15 percent.

International Business Machines Corp. (Nasdaq: IBM) lost 3.5 percent to $189.50. Revenue fell 3.9 percent from a year earlier to $22.5 billion in the first quarter as sales continued to tumble in its hardware unit and in developing countries, IBM said Wednesday in a statement. That compared with analysts’ average estimate of $22.9 billion. The stock closed today 0.3 percent lower at $196.40.

— Bloomberg contributed to this report.

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