Stocks rally most in seven weeks amid economic optimism

A solid employment report and rising consumer confidence led to a rally in stock prices on Thursday.

The Dow Jones Industrial Average gained 136.16 points to 13,232.62. The Nasdaq Composite Index was up 42.83 points to 3,020.06 and the S&P 500 Stock Index added 15.43 points to 1,427.59.

ADP reported private sector payrolls rose by 158,000 in October. That number may be a preview of the official government jobs report due out on Friday before the start of trading.

Stocks could also get a boost from earnings reports issued after the close by companies such as Starbucks Corp. (Nasdaq: SBUX) and Priceline.com (Nasdaq: PCLN).

Commodities were mixed. Gold fell $3.60 to $1,715.50 an ounce and oil rose 85 cents to $87.09 a barrel.

“One of the major concerns of the market is a deceleration of growth,” Mark Freeman, who oversees about $14 billion as chief investment officer at Westwood Holdings Group Inc. (NYSE: WHG) in Dallas, said in a phone interview. “The data is actually saying that deceleration has basically stopped and the growth rate has stabilized. When we look at fundamentals, the economy still supports earnings growth going into next year.”

The S&P 500 fell 2 percent in October, ending four months of gains, as concern grew that slowing economic growth will curb earnings. The benchmark index rallied 15 percent from a June low to a four-year high on Sept. 14 as central banks around the world stepped up stimulus to boost the economy. The S&P 500 reversed a loss in the final hour of trading Wednesday as equity markets reopened following a two-day shutdown because of Hurricane Sandy.

Forty-one companies in the S&P 500 post results Thursday, according to data compiled by Bloomberg. Earnings have exceeded projections at 72 percent of companies that have released third- quarter results, while sales have trailed estimates at 59 percent of firms, Bloomberg data show.

Companies whose earnings are most tied to economic swings rose the most among 10 S&P 500 industry groups as commodity, technology and industrial shares climbed more than 1.8 percent. Intel Corp. (Nasdaq: INTC) added 2.9 percent to $22.26, while Microsoft Corp. (Nasdaq: MSFT) jumped 3.4 percent to $29.52. Caterpillar Inc. (NYSE: CAT), the largest builder of construction and mining machinery, rose 3.4 percent to $87.65.

The Morgan Stanley Cyclical Index climbed 2.6 percent, the most since Sept. 6. Bank of America Corp. (NYSE: BAC) 4.5 percent to $9.74, while JPMorgan Chase & Co. (NYSE: JPM) increased 2.8 percent to $42.84. D.R. Horton Inc. (NYSE: DHI) gained 4.2 percent to $21.84, helping drive an S&P measure of homebuilders up 2.6 percent.

Visa Inc. (NYSE: V) advanced 3.7 percent to $143.88. The world’s biggest payments network reported an 89 percent increase in quarterly net income to $1.66 billion. Adjusted profit per share was $1.54, beating the $1.50 average analyst estimate.

Macy’s Inc. (NYSE: M) climbed 6.4 percent to $40.52. The second-biggest U.S. department-store chain boosted its forecast for same-store sales in the second half of the year, to a 4 percent gain compared with the year-ago period. The company had previously estimated an increase of 3.7 percent.

Ross Stores Inc. (Nasdaq: ROST) and Target Corp. (NYSE: TGT) posted October same-store sales that trailed analysts’ estimates as consumers held back on discretionary spending ahead of the U.S. presidential election and Hurricane Sandy diverted some traffic.

Ross Stores dropped 6.3 percent to $57.13. The operator of apparel and home accessories stores said sales rose 4 percent, falling short of the average projection for a 4.3 percent gain from analysts surveyed by researcher Retail Metrics Inc.

Target slipped 1.3 percent to $62.94. The second-biggest U.S. discount retailer posted a 2.4 percent increase in same- store sales, missing the 2.9 percent estimate.

Abercrombie & Fitch Co. (NYSE: ANF) climbed 8.7 percent to $33.23. The teen-clothing retailer didn’t update its sales figures. The absence of pre-announcement “may mean more limited downside risk, and could provide relief” to the stock, Roxanne Meyer, an analyst with UBS AG (NYSE: UBS), wrote in a note to clients.