Total Investor

U.S. stocks surged closer to multi-year highs on Thursday, as hopes for a major budget deal in Washington and efforts to contain Europe’s sovereign-debt crisis whetted investors’ risk appetite.

The Dow Jones Industrial Average finished 152.50 points higher, or 1.21%, at 12724.41, for its second triple-digit gain in three sessions. All but one Dow component advanced as investors applauded steps toward a fresh Greek financing package. Stocks pushed higher on afternoon reports that a U.S. budget bargain neared, though the White House and a spokesman for House Speaker John Boehner denied it.

The Standard & Poor’s 500-stock index gained 17.96 points, or 1.35%, to close at 1343.80, led by the financial sector. The technology-heavy Nasdaq Composite rose 20.20 points, or 0.72%, to 2834.43.

Investors faced a full docket of economic data and earnings reports, but fiscal debates on two continents drove Thursday’s action.

The advance left the blue-chip index a little more than half a percentage point from the multi-year closing high it reached in late April. The broader S&P 500 stood about 1.5% from its own high-water mark.

In corporate news, Medco Health Solutions leapt 14% after Express Scripts moved to buy the company for $29.1 billion. Express Scripts’ stock gained 5.4%.

Morgan Stanley climbed 11% after swinging to a loss on a restructuring charge but showing resurgent revenue in the company’s investment-banking, trading and wealth-management units.

Intel was the sole blue-chip decliner, falling 0.8%. The company’s second-quarter profit rose a better-than-expected 2.3%, but margins fell, and Intel also slightly trimmed its forecast for unit PC shipments for the year.

Base metals closed mostly lower on the London Metal Exchange Thursday although earlier losses were pared after European leaders outlined a proposal to handle Greece’s debt crisis, easing concerns of debt contagion in the region. Comments by ratings agency Standard & Poor’s indicating that there is a 50% chance of the U.S. government’s credit rating behind cut within the next three months damped the market’s mood somewhat, holding back gains.

Oil pushed higher, briefly topping US$100 a barrel, as investors cheered progress on an agreement to aid Greece and the world’s largest oil consumers decided against releasing additional oil stockpiles. Gold fell for a third day as perceived progress toward sovereign-debt deals in the U.S. and Europe eased investor demand for a safe place to park cash.

Australian Stock Prices Overnight

In New York, News Corp rose by US$0.55 to US$16.97, equivalent to A$15.66, A$0.18 above its last close on the ASX. ResMed fell by US$0.28 to US$32.05, equivalent to A$2.96, A$0.01 below its last close on the ASX. In London, Rio Tinto fell 44.0 pence to £43.77, A$0.66 lower in Australian currency terms. BHP-Billiton fell 1.5 pence to £23.63, A$0.02 lower in Australian currency terms. Henderson Group Plc rose 1.4 pence to £1.62, A$0.02 higher in Australian currency terms.

A gloomy economic assessment from Federal Reserve Chairman Ben Bernanke erased an earlier rally in US stocks, sending major indexes in the final minutes of Tuesday’s session to their fifth-consecutive drop.

The Dow Jones Industrial Average closed down 19.15 points (0.16%) to 12,070.81. The blue-chip index has dropped 3.97% during its five-day skid, its longest losing streak since August. The Dow rose as much as 89 points during Tuesday’s session before finishing lower.

The Standard & Poor’s 500-stock index dropped 1.23 points (0.1%) to 1,284.94, led lower by the technology and telecom sectors. The index, which is down 4.5% during its five-day losing streak, hit its lowest closing level since March 18.

The technology-oriented Nasdaq Composite dropped 1 point (0.04%) to 2,701.56, its third-straight loss and fourth decline in the last five sessions.

The sharp afternoon reversal came after Bernanke offered downbeat comments on the US economy. He said economic growth has been “somewhat slower” than expected, although he added that the recovery should pick back up in the second half of 2011 despite recent signs of weakness.

Bernanke also said the recovery two years after the end of the recession remains “uneven” and that conditions – particularly in the labour market – remain troubled.

Bernanke’s comments follow a drumbeat of weak economic data and worries that the recovery is running out of steam. The government’s disappointing jobs report last week came on the heels of several weak regional manufacturing reports and consumer confidence data that have fuelled anxiety on Wall Street.

The disappointing data combined with the looming end of the Fed’s bond-buying program, or “quantitative easing,” has weighed on investor sentiment. Chatter of a third round of quantitative easing, or “QE3,” has intensified in recent weeks as more investors are discussing whether the Fed may have to enact some new form of monetary support.

Base metals made very little progress on the London Metal Exchange, closing largely flat on the day as market players avoided making any bold moves in a trading session largely devoid of directional cues. Gold futures ended slightly lower, as traders looked past a weakening dollar while awaiting a speech late in the day from Federal Reserve Chairman Ben Bernanke. Oil settled nearly flat as traders remained on the sidelines ahead of a closely watched OPEC meeting.

Australian Stock Prices Overnight

For Australian ADRs listed on the NYSE, BHP Billiton lost 51 cents (0.56%) to $91.34, ResMed dipped 69 cents (2.17%) to $31.08, Telstra Corporation rose 1 cent (0.06%) to $16.15, Telecom Corporation of NZ slid 10 cents (1.05%) to $9.43 and Westpac slid 53 cents (0.46%) to $113.55.

US stocks extended their multiyear highs on Thursday as the market clung to optimism generated by the Federal Reserve’s plans to keep interest rates low and the flow of encouraging corporate earnings.

The Dow Jones Industrial Average rose 72.35 points (0.6%) to 12763.31, its highest close since May 20, 2008. Leading the blue-chip measure, Boeing climbed 2.43 (3.2%) to 78.55. Procter & Gamble was also strong, rising 48 cents (0.8%), to 64.50, after its first-quarter earnings beat analysts’ estimates, though the global consumer-products firm offered cautious guidance for the year, reflecting higher commodity costs.

The Nasdaq Composite added 2.65 (0.1%) to 2872.53, its highest close since Dec. 12, 2000. The Standard & Poor’s 500-stock index rose 4.82 (0.4%) to 1360.48, finishing at its highest level since June 9, 2008.

After reaching a new closing high on Wednesday, the Russell 2000 index of small-capitalization stocks extended its gains, rising 3.24 points (0.4%) to 861.55. The Dow Jones Transportation Average, which is often seen as important evidence of an active economy, reached a new all-time closing high at 5510.06, topping its previous record close of 5493 from June 6, 2008.

Among other companies reporting earnings, Sprint Nextel gained 32 cents (6.7%) to 5.11, after the wireless carrier narrowed its first-quarter loss by nearly half, adding customers as it weathered the introduction of the Verizon Wireless iPhone.

Aetna rose 1.64 (4.1%) to 41.45, after boosting its 2011 earnings target and beating first-quarter estimates. Akamai Technologies slid 6.04 (-15%) to 34.94, after the Internet-content-delivery company said it was renewing contracts at lower prices for some customers and handling lower volumes on others.

Shares of insurer Allstate jumped 1.82 (5.7%) to 33.76, after its first-quarter earnings more than quadrupled as catastrophe losses plunged and revenue increased.

Coffee giant Starbucks shed 31 cents (-0.8%) to 36.88, after fiscal second-quarter earnings met a downbeat projection and the company raised its full-year profit outlook but predicted high commodity costs will take an even bigger bite out of the bottom line.

Microsoft closed up 33 cents (1.3%) to 26.71, ahead of its earnings report after the market’s close. The stock was down 2.5% in after-market trading after the software firm’s earnings only met analysts’ expectations, excluding a 5-cent tax benefit. Revenue topped Street forecasts.

In deal activity, Constellation Energy rose 1.96 (5.7%) to 36.26, after Exelon agreed to buy the electricity generator and utility operator in a stock deal valued at $8 billion. Shares of Exelon added 69 cents (1.7%) to 42.18.

For Australian ADRs listed on the NYSE, BHP Billiton weakened 12 cents (0.12%) to $101.04, ResMed dropped 31 cents (0.91%) to $33.61, Telstra Corporation added 27 cents (1.74%) to $15.75, Telecom Corporation of NZ added 8 cents (0.93%) to $8.70 and Westpac gained 22 cents (0.16%) to $138.40.

The market largely looked past a lukewarm round of economic data. US pending home sales climbed more than expected last month, but gross domestic product showed a significant slowing from the previous quarter. A third batch of data showed US jobless claims unexpectedly rose last week.

Base metals on the LME finished mixed. Aluminium rose $14 (0.51%) to $2,763 while copper firmed $54 (0.58%) to $9,375 and nickel added $220 (0.83%) to $26,850. Zinc strengthened $15 (0.67%) to $2,255 and lead fell $7 (0.28%) to $2,491. Comex copper was last quoted at 424.50 US cents per pound.

Spot gold was last quoted at $1,535.10. Comex gold futures increased $14.10 (0.93%) to $1,530.80. Spot silver was last quoted at $48.34. West Texas Intermediate was last quoted at US$112.86 per barrel.

Australian Stock Prices Overnight

In New York, News Corp rose by US$0.11 to US$18.99, equivalent to A$17.36, A$0.22 above its last close on the ASX. ResMed fell by US$0.31 to US$33.61, equivalent to A$3.07, A$0.01 above its last close on the ASX.

In London, Rio Tinto rose 25.5 pence to £43.60, A$0.39 higher in Australian currency terms. BHP-Billiton rose 19.5 pence to £25.25, A$0.30 higher in Australian currency terms. Henderson Group Plc rose 0.8 pence to £1.62, A$0.01 higher in Australian currency terms.