Stocks Rise Modestly; Home Depot Gains

Stocks are up modestly after a batch of economic data showed glimmers of strength in the economy and as investors await the critical August jobs report coming out on Friday.

S&P 500

The Dow Jones Industrial Averagerose about 5 points, led by Home Depot, Alcoa and Cisco. American Expressand Kraft fell.

The S&P 500andNasdaq rose. Most S&P sectors are higher, with consumer discretionary, industrials and technology stocks performing best. The CBOE Volatility Index, widely considered the best gauge of fear in the market, is down below 24.

After the worst August since 2001, the month got off to a strong startwith the biggest gains for the Dow since July 7. But investors appear to be taking a breather today as they await Friday’s monthly jobs report for greater insight on the health of the U.S. economy.

Shares of Mariner Energy fell following news of a rig explosionin the Gulf of Mexico on a shallow-water platform owned by the company. Shares of rivals Transocean, Halliburton and Baker Hughes rose.

One sign of economic strength on Thursday came from August retail chain store sales reports, which are showing solid gains, up 3 percent compared with an estimated increase of 2.8 percent.

Limited , posted one of the best results with same store sales up 10 percent in August, beating the projected 7.3 percent increase. Costco's August results were also brighter, up 5 percent, beating a projected 3.6 percent increase. Nordstrom's shares surged after the department-store retailer reported its August sales were up 6.3 percent, compared with the 5.9 percent estimate.

Bleaker results were reported by teen retailers, including Aeropostale , which saw August sales drop 1 percent drop in August instead of rising 1 percent, as expected. American Eagle's August sales rose 1 percent for August, slightly worse than the 1.1 percent forecasted.

Dell bowed out of the bidding for 3Par after rival Hewlett-Packardraised its bid to $33 per share from $30 per share. Dell, which had initiated the bidding for 3Par, had previously raised its bid to $32 a share.

Meanwhile Burger King Holdingsconfirmed it is being soldto private equity firm 3G Capital in a deal worth $3.26 billion.

A JPMorgan Chase executive told Reuters the company hasn't ruled out the possibility of buying Discover Financial or another payments processing network, even though he said such a deal would be "difficult".

In other tech news, shares of Apple are slightly lower after the company was removed from the short-term buy list by Deutsche Bank. The move comes a day after the computer maker announced a smaller, cheaper version of Apple TVto stream movies and television shows over the Internet, as well as new models of all its iPods.

A series of economic data released today provided investors with some better news.

Pending home sales posted a surprising jump of 5.2 percentto 79.4 in July from June, according to The National Association of Realtors. Economists polled by Reuters had forecasted a 1.0 percent drop for July. The group said June contracts were revised to show a 2.8 percent decline instead of the previously reported 2.6 percent fall.

Earlier the Labor Department reported weekly jobless claims fell by 6,000 to 472,000 for the week ended Aug. 28, better than the 475,000 forecast by economists polled by Reuters. Last week's claims were revised up to 478,000 in Thursday's report.

Some market participants were upbeat on the jobs news. "The drop in claims over the last two weeks suggests the 504,000 reading in mid-August was a temporary aberration, and that the economy has slowed but not slipped into recession," Zach Pandl, an economist at Nomura Global Economics said in a note to clients.

Also Thursday, the government reported nonfarm productivity fell 1.8 percent, more than previously estimated in the second quarter and the largest drop since the third quarter of 2006. Consensus forecasts called for productivity to have dropped to a 1.9 percent annual rate and unit labor costs to have risen by 1.1 percent.

And the Commerce Department reported factor orders rose 0.1 percentto a seasonally adjusted $409.5 billion thanks to strong demand for commercial aircraft. Orders had fallen the previous two months.

On Tap This Week:
THURSDAY: August chain store sales; earnings after the bell from H&R Block.
FRIDAY: August jobs report; Fed's Lockhart speaks; ISM services index; earnings before the bell from Campbell Soup.

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