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Stocks Extend Gains, Led by Materials

Stocks advanced Thursday, buoyed by materials and energy, seeking to reverse a six-day losing streak as investors were encouraged report showing that exports hit a record high in April, narrowing the U.S. trade deficit.

The Dow Jones Industrial Average jumped more than 90 points, led by DuPont , Chevron and JPMorgan, after finishing lower for the sixth-consecutive sessionWednesday.

The S&P 500 and the tech-heavy Nasdaq rallied. The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled below 18.

Both the Dow and the S&P 500 are looking to snap a six-day losing streak, the Dow's longest decline since July 2010 and the S&P 500's worst since February 2009.

Among key S&P sectors, energy,materials and financials rose.

“The trend is downward and this is not the beginning of the bull market,” said Brian Gendreau, market strategist with Financial Network, citing the string of weak economic numbers in the recent weeks.

While Gendreau said the economy is currently in a “soft patch,” he still expects a turnaround in the economy and for the S&P to hit 1,380 by year-end.

Texas Instruments cut its earnings and revenue forecast, blaming the shortfall on major client Nokia's struggling cellphone business. Meanwhile, Bank of America and Citigroup cut their price targets on TI. Nokia was trading higher even after the phone maker's chief technology officer announced a leave of absenceand is unlikely to return after disagreements over the strategy of the flailing company.

Rival Research In Motion edged higher, even after Citigroup lowered its rating on the BlackBerry maker to "hold" from "buy."

Also on the tech front, Intel announced "multi-million" investments in two Russian online firms, in a fresh sign of investor confidence in growth prospects of internet businesses.

Meanwhile, JPMorgan lowered its PC and tablet forecasts for 2011, due to an uncertain growth profile in China and weakness in global consumption. The firm warned companies including Nvidia , Micron , Seagate and Western Digital .

Google was slightly higher even after Thinkequity removed the search-engine giant from its "buy list."

Citigroupconfirmed a credit card breachat its online unit. However, Citi said only about 1 percent of customers were affected by the breach, and that social security numbers and card security codes were not compromised.

Meanwhile, Lubrizol gained after the firm's shareholders supported Berkshire Hathaway's $9 billion offer to buy the specialty chemical company.

JM Smucker gained after the maker of Jif peanut butter posted better-than-expected results and forecast strong sales, as the company continues to raise prices of its brands without putting off shoppers.

In IPO news, Taomee slumped in their stock market debut as U.S.-listed Chinese companies are being put under more scrutiny following a handful of acconting scandals.

Oil prices gainedafter OPEC failed to reach agreement over increasing production, with U.S. light, sweet crude rose over $101 a barrel, while London Brent crude climbed over $118. Gold advanced above $1,540 an ounce.

The government is scheduled to auction $13 billion in 30-year bonds at 1 pm ET.

On the economic front, wholesale inventories rose less than expected in April, but seemed enough to boost investor confidence and stocks.

Inventories rose 0.8 percent to $447.2 billion in the first month of the second quarter, below economists forecasts of 1.0 percent, according to the Commerce Department. Automotive inventories, one of the biggest categories, fell 1.3 percent. Wholesale inventories have increased 16.6 percent since hitting a low in September 2009.

And the U.S. trade deficit narrowed unexpectedly to $43.7 billion in April from a revised estimate of $46.8 billion, as exports rose to a new record and imports from Japan tumbled more than 25 percent in the aftermath of its earthquake, tsunami and nuclear disaster, according to the commerce department. Analysts expected the April trade gap to widen to $48.8 billion.

Meanwhile, initial claims for state jobless benefits increased 1,000 to 427,000, the Labor Department said. However, economists polled by Reuters had forecast claims dropping to 415,000 from a previously reported count of 422,000.

The rise kept first-time claims perched above the 400,000 mark for the ninth week in a row. Analysts normally associate a level below that with steady job growth.

Meanwhile, the greenback gained against the euro after the ECB President Jean-Claude Trichet signaled a rate hike next month that already had been widely expected, leaving little room for further upside in the single currency.

European shares fell for a seventh straight day in a choppy session, with retailers under pressure on a grim consumer spending outlook and banks falling.

Coming Up This Week:

THURSDAY: 30-year Treasury bond auction, money supply, Fed's Yellen speaks; earnings from National Semiconductor.
FRIDAY: Import & export prices, Treasury budget; earnings from Lululemon Athletica.

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