By MATT JARZEMSKY
NEW YORK—U.S. stocks rose the most in two weeks as a Spanish budget plan eased fears about Europe’s debt woes and China moved to add liquidity to its banking system.
The Dow Jones Industrial Average added 72.46 points, or 0.5%, to 13485.97, its biggest daily increase since Sept. 13, the day Federal Reserve Chairman Ben Bernanke announced a new bond-buying program meant to stimulate the economy.
The S&P 500 rose 13.83 points, or 1%, to 1447.15, after falling for five-straight days, its longest slump since July. Technology shares led the index Thursday. Energy shares advanced alongside a rally in oil prices.
The Nasdaq Composite Index gained 42.90 points, or 1.4%, to 3136.60.
“The market is strong because of headlines about China and the lack of negativity in Europe, and the ‘QE bid’ is still there” said Frank Ingarra, head trader of NorthCoast Asset Management, referring to stock buying because of “quantitative easing,” efforts by central banks to bolster the economy.
Spain unveiled a 2013 budget plan with severe cuts and reforms aimed at persuading international authorities the country is on track to meet deficit-reduction targets. Spain faces pressure to request a bailout from the European Union under conditions that would allow the European Central Bank to buy Spanish government bonds.
An official with the European Union’s executive body said later Thursday the reform plan goes beyond what the group has recommended in some areas.
The Stoxx Europe 600 rose 0.3%. But Spain’s IBEX 35 dropped 0.2%, reversing earlier gains amid the prospect of budget cuts.
Asian markets rallied after China’s central bank injected a record amount of liquidity into the banking system this week, easing concerns about a potential cash crunch ahead of quarter end. Traders said speculation about additional stimulus in the country also gave stocks a boost.
China’s Shanghai Composite ran up 2.6%, after closing at the lowest level since January 2009 on Wednesday. Japan’s Nikkei Stock Average climbed 0.5%.
“It would seem that the market is pricing in significant challenges, but it’s also pricing in significant policy response by the European, American and Chinese authorities,” said Stephen Wood, chief market strategist at Russell Investments, which manages $152 billion in assets.
In the U.S., the number of Americans filing applications for jobless benefits last week fell to the lowest level since July, a sign of labor market improvement.
But durable-goods orders plunged 13% in August, a much steeper drop than economists expected, the Commerce Department reported. The department also revised its reading on second-quarter economic growth down to 1.3% from 1.7%.
Fewer U.S. home buyers signed contracts to purchase previously owned homes in August. Economists had expected a slight increase in pending home sales.
Front-month crude oil futures gained 2.1% to settle at $91.85 a barrel, while October gold futures tacked on 1.5% to finish at $1,777.60 an ounce. The dollar fell against the euro and the yen.
In corporate news, shares of Sealy
gained after the company agreed to be acquired by fellow mattress company Tempur-Pedic International
in a deal valued at $1.3 billion including debt assumption.
fell after the retailer of low-cost goods said some of its current stockholders, including a unit of buyout firm KKR Co.,
will offer at least 30 million shares. KKR led a leveraged buyout of Dollar General in 2007 and has retained some of its stake since taking the retailer public in 2009.
Discover Financial Services
climbed after reporting better-than-expected quarterly earnings. The company reported a drop in credit cards delinquencies and uncollectible loans.
gained as the maker of Four Winds and Dutchman recreational vehicles’ quarterly sales jumped 15%, more that it had forecast. Thor’s profit for the period handily beat analysts’ projections.
Write to Matt Jarzemsky at email@example.com